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Gold & Precious Metals


Sales Update

June 6, 2013

Gold & Precious Minerals Research

For Reg AC Certification and important disclosures see Appendix A of this report. Analysts employed by non-U.S.

affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Tanya Jakusconek, M.Sc., Applied (416) 945-4083

(Scotia Capital Inc. Canada)

[email protected]

Joanne van Ballegooie (416) 863-7431(Scotia Capital Inc. Canada)[email protected]

James Bender, CA (416) 945-4648(Scotia Capital Inc. Canada)[email protected]

Priced as at June 5, 2013, unless otherwise stated

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Gold ETFs and Gold Price Gold ETFs - Inflows and Outflows

Source: Bloomberg; GFMS; ETF websites for all Exhibits

Selling Pressure ETFs and Comex

Seeing selling in the ETFs; Q1 saw sales of 187 tonnes.ETFs are down 475 tonnes year-to-date.

Currently there are ~16 tonnes above $1,400/oz gold. The Comex position has declined 9.3 Moz (~290t) YTD. The World Gold Council estimates that 75% of thecombined outflows have stemmed from the US market. The WGC believes that most of the gold previously heldin ETFs are headed to Asian consumers taking a long-term view on gold.

Weekly Speculative Positions on the COMEX

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

-200

-150

-100

-50

0

50

100

150

200

250

Dec-05 Dec-06 Dec-07 Dec-08 Dec-10 Dec-10 Dec-11 Dec-12

GoldPrice(US$/oz)

Tonnes

E TF - to nn es bo ug ht /s ol d - mo nt hl y M on th ly Av er ag e G ol d P ri ce

Min Max Tonnes

$1,600 0

Price Range (US$/oz)

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

Q3/04 Q3/05 Q3/06 Q3/07 Q3/08 Q3/09 Q3/10 Q3/11 Q3/12

GoldPrice(US

$/oz)

GlobalGoldETFDem

and(tonnes)

Tonnes Gol d P rice

2,182

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

(90,000)

(60,000)

(30,000)

0

30,000

60,000

90,000

120,000

150,000

180,000

210,000

240,000

270,000

300,000

US$/oz

Non-Commercial-NetPosition

Non Commerical Pos it ion - Fu tures On ly London PM Fix Go ld Pr ice

Current Long Position = 56,879 contracts or 5.7 Moz

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Gold Seasonality Heading into Seasonally Weaker Period

-10%

-8%

-6%

-4%

-2%

0%

2%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

GoldPriceMonthlyR

eturns

Mean 20 13

-22%

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%


S&P/TSXGoldIndexMon

thlyReturns

Mean 2013

-22%

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%


HUIMonthlyReturns

Mean 2013

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%


XAU

MonthlyRet

urns

Mean 2013

Gold Price Monthly Returns (1971-2012) S&P/TSX Gold Index Monthly Returns (1988-2012)

AMEX Gold BUGS Index Monthly Returns (1996-2012)

Source: Bloomberg, Scotiabank GBM for all Exhibits

Philadelphia Gold Index Monthly Returns (1980-2012)

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Money Supply (high levels) and the Velocity of Money (low levels)

-

2,000

4,000

6,000

8,000

10,000

12,000

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Jan-72

Jan-74

Jan-76

Jan-78

Jan-80

Jan-82

Jan-84

Jan-86

Jan-88

Jan-90

Jan-92

Jan-94

Jan-96

Jan-98

Jan-00

Jan-02

Jan-04

Jan-06

Jan-08

Jan-10

Jan-12

M2MoneySupply

GoldPrice($/oz)

Gold Pri ce M2 Mon ey Su pply

Gold Price/M2 Money Supply r2 = 81%

Gold has a strong correlation withmoney supply. We expect gold toperform better as printed moneyultimately works its way through thesystem.

Source: Bloomberg; Scotiabank GBM for both Exhibits.0.30

0.40

0.50

0.60

0.70

0.80

0.90

3

4

5

6

7

8

9

10

11

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Velocity (RHS)

Multiplier Using MzM (LHS)

Multiplier:MoneyZeroMaturity MoneyStocks(MzM)/ReservesofDepositoryInstitutionsAdjustingforChangesinReserveRequirements,MonetaryBaseVelocity

GDP/ MoneyZeroMaturity MoneyStocks(MzM)

Velocity of money and moneymultiplier are at all-time lows indicatingmoney supply is not in the system yet. Increase in the velocity of moneylikely to be indicative of inflation.

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2

4

6

8

10

12

14

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2013

%

ofTSX

Investors marketweight gold

Investors marketweight gold

Current clientweighting ~4.0%

Gold Index Weighting on the S&P/TSX

Key holdings for institutional clients are G, AEM, YRI, and FNV in Canada andNewcrest, AU, and NEM in the U.S.

Source: DRI, Scotiabank GBM.

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Performance Year-to-Date

Source: Bloomberg, Scotiabank GBM.

North American Gold Producers, Indexes, and Commodities Performance

14.2%12.8%12.6%

7.5%3.5%

2.1%0.1%

-0.8%-1.7%

-2.9%-4.3%

-5.8%-6.1%

-8.2%-15.3%

-18.1%-19.4%

-21.1%

-24.4%-24.5%-24.7%

-25.7%-30.4%-30.6%

-31.1%-32.3%

-33.2%-34.5%

-36.7%-36.8%

-37.5%

-37.9%-39.0%-40.1%-40.4%

-41.9%-42.4%

-48.7%-52.0%

-52.6%-69.7%

-70% -60% -50% -40% -30% -20% -10% 0% 10% 20%

Dow JonesS&P 500NASDAQPalladium

US TW Dollar

OilS&P/TSX Comp.

EuroPlatinum

LeadCanadian $

ZincCopper

Australian $Gold

RandGoldcorpRandgold

Franco-NevadaS&P/TSX Global Mining Index

NewmontSilver

S&P/TSX Gold IndexRoyal Gold

YamanaKinross

FTSE/JSE Africa Gold Mining IndexPhiladelphia Gold Index

Eldorado GoldAgnico Eagle

AMEX Gold BUGS Index

FTSE Asia Pacific Gold IndexBarrick GoldHSBC Australian Gold Index

NewcrestGold Fields

AngloGold AshantiBuenaventura

IAMGOLDHarmony

African Barrick

Year-to-Date Percentage Change

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North American Gold Producers, Indexes, and Commodities Performance

Source: Bloomberg, Scotiabank GBM.

Performance From May 17, 2013 Low

23.8%20.7%

18.1%17.5%

16.5%

14.9%14.2%

13.7%13.4%

13.0%12.9%

12.1%12.0%

11.3%11.3%

10.1%8.8%

6.6%6.4%

4.9%4.0%3.8%

3.3%2.7%2.6%

2.0%2.0%

1.8%1.4%1.3%

0.0%-0.6%

-1.3%-1.9%-2.0%

-2.4%-2.6%

-2.8%-3.5%

-4.5%-6.4%

-10% 0% 10% 20% 30%

KinrossEldorado GoldAgnico Eagle

IAMGOLDS&P/TSX Gold Index

Royal GoldBarrick Gold

GoldcorpYamana

NewmontAMEX Gold BUGS Index

LeadHarmony

Philadelphia Gold IndexFTSE/JSE Africa Gold Mining Index

Franco-NevadaRandgold

ZincGold Fields

HSBC Australian Gold IndexPlatinum

BuenaventuraAngloGold Ashanti

PalladiumGold

CopperEuro

FTSE Asia Pacific Gold IndexSilver

S&P/TSX Global Mining IndexAfrican Barrick

Canadian $S&P/TSX Comp.

Australian $US TW Dollar

OilDow Jones

NASDAQS&P 500

NewcrestRand

To Date Percent Change from May 17 Low

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What Clients are Focused on Stock Wise

ABX Outcome of Pascua-Lama, asset sales and senior managements roleG Waiting for the water study (mid-year); development pipelineK No expectations; Tasiast build still questionable

NEM New CEO, clients waiting to see new strategyAEM Possible M&A? Market expects Meliadine to be deferredELD Permitting (Eastern Dragon, Perama Hill, and Kisladag expansion), headlinerisk news (Greece), and development pipelineIMG No expectations (future of management?); possible break-up of company

YRI Exposure to Argentina and development of its pipeline. Possible M&A?ABG No expectationsBVN No expectations (waiting for NEM to make statement on development ofConga)

AU & GFI South African and rand exposure; most prefer AU to GFI

GOLD Political risk and possible M&A?FNV Possible M&A? and development of Cobre PanamaRGLD Uncertainty over the development of Pascua-Lama (ABX) and start-up Mt.Milligan (Thompson Creek)

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General Themes of Interest

Cost cutting What can companies do? How much can they cut? What relief isbeing seen in the cost structure and currency sensitivities are noted on page 12and 13.

M&A Are the seniors and mid-tiers in the market to buy. We believe the onlynames in our group which COULD (not WOULD) do something are G, AEM, YRIand FNV; GOLD (in the internationals)

Corporate Debt Levels and Covenants at various gold prices FCF Generation at various gold prices

Taxation which countries are at risk Political Risk which countries are at risk

Top Picks G in the seniors

YRI, AEM, and ELD in the mid-tiers

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Breakdown of Cost Structure

Labouraccounts for about 38% of overall cash costs certain areas are seeing more strain thanothers. Companies are saying this is more sticky but more people are available for hire. Fuel and poweraccount for about 20% of overall cash costs a $10/bbl move in oil moves cashcosts by approximately $9/oz (fuel alone). Consumables (cyanide, tires, lime, explosives, and steel) account for 25% are seeing relief intires and some cyanide pricing.

Other(refining, maintenance, and royalties) accounts for 18% of cash costs.

2012 20112013E Head Reserve

Cash Costs Grade Grade Labour Fuel Power Consumables Other Total

ELD $566 0.040 0.031 23% 9% 12% 42% 14% 100%

K $768 0.028 0.021 36% 14% 10% 33% 7% 100%

G $725 0.030 0.023 38% 8% 11% 15% 28% 100%IMG1 $863 0.036 0.038 24% 13% 14% 13% 36% 100%

NEM $706 0.042 0.028 50% 10% 10% 10% 20% 100%

ABX $640 0.056 0.038 40% 10% 5% 20% 25% 100%

AEM $769 0.083 0.108 41% 3% 5% 39% 12% 100%

YRI $583 0.029 0.025 26% 8% 12% 33% 21% 100%

Other:

ABG $955 0.096 0.124 40% 15% 5% 20% 20% 100%

AU $834 0.050 0.052 50% 10% 9% 23% 17% 100%

BVN $676 0.038 0.024 45% 10% NA 30% 15% 100%GFI $858 0.062 0.070 43% 4% 11% 29% 13% 100%

GOLD1 $727 0.083 0.112 40% 10% 20% 20% 10% 100%

Average $727 0.047 0.044 38% 10% 10% 25% 18% 100%

Notes:a our ncu es mne con rac ng an consu an cos s .

Figures may not add due to roundingSource: as provided by company of f icials/reports , Scotiabank GBM.

Cash Cost Components

Breakdown of Cost Structure

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FX Has a Significant Impact on Costs

In Q2/13 to date we have seen some currency relief: Euro/US$ = -1%

C$/US$ = -1% ZAR/US$ = -4% A$/US$ = -3% BRL/US$ = -1% CNY/US$ = 1% PEN/US$ = -2%

Source: Company reports; Scotiabank GBM.

Per Ounce

2013E Costs 10% Change in mpac 1 % Impact

(US$/oz) Major Currency (US$/oz) on Cash Costs

Barrick $640 AUD $11 2%

Goldcorp $725 CAD $19 3%

IAMGOLD $863 CAD $14 2%

Kinross $768 REAL $9 1%

Newmont $706 AUD $6 1%

Eldorado $566 Renminbi $23 4%

Agnico $769 CAD $70 9%

Yamana $583 Real $19 3%

African Barrick $955 Tanzanian Shilling $15 2%

AngloGold Ashanti $834 RAND $35 4%Buenaventura $676 Peruvian neuvo sol $31 5%

Gold Fields $858 RAND $75 9%

Randgold $727 Euro $18 2%

Weighted Average $727 $27 4%

Notes:1) Reflects the per ounce change in cost to a 10% change in the currency show n.

CURRENCY SENSITIVITY

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Upcoming Institutional Events Please Invite Clients

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Appendix A: Important Disclosures

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Appendix A: Important Disclosures

Company Ticker Disclosures (see legend below)*

African Barrick Gold plc ABG P, TAgnico Eagle Mines Limited AEM P, TAlacer Gold Corp. ASR P, TAlamos Gold Inc. AGI P, T

Allied Nevada Gold Corp. ANV I, T, VS6AngloGold Ashanti Limited AU G, I, N1, P, T, UArgonaut Gold Inc. AR P, T, VS9AuRico Gold Inc. AUQ P, T, V9, VS10B2Gold Corp. BTO VS11Barrick Gold Corporation ABX G, I, N1, P, T, U, V40, VS1Centerra Gold Inc. CG P, TCompaa de Minas Buenaventura SAA BVN P, TDetour Gold Corporation DGC VS7

Dundee Precious Metals Inc. DPM P, T, VS12Eldorado Gold Corporation EGO P, T, VS2Franco-Nevada Corporation FNV I, V31Gold Fields Limited GFI P, TGoldcorp Inc. GG D26, G, I, N1, P, T, U, VS3, VS4Golden Star Resources Ltd. GSS J, P, TIAMGOLD Corporation IAG G, I, N1, P, T, U, VS5Kinross Gold Corporation KGC I, P, TNew Gold Inc. NGD G, I, N1, P, T, U

Newmont Mining Corporation NEM I, P, TNorth American Palladium Ltd. PAL G, I, T, UOsisko Mining Corp. OSK I, P, T, VS8Primero Mining Corp. P G, I, URandgold Resources Limited GOLD P, TRio Alto Mining Limited RIO I, P, TRoyal Gold Inc. RGLD G, I, USEMAFO Inc. SMF P, TSilver Wheaton Corp. SLW V25

Teranga Gold Corporation TGZ I, P, TTimmins Gold Corp. TMM VS13Yamana Gold Inc. AUY P, T

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Documents

Sales Team - June 6 2013