1 Shift in gold production from traditional to emerging countries Marino G. Pieterse Editor Goldletter International China Mining 2008 – Beijing November 11 – 13, 2008

2 Global financial crisis in perspective Prime mortgage crisis $ 500 billion Credit crunch $ billion Global Financial Stability Report (IMF): Rescue package United States$ 700 billion Europe$ 300 billion - Banks write-off : $ 580 billion (40% European banks) - Estimated additional write-off over next 5 years $ 675 billion Credibility crisis Global stock markets crunch Economy crisis $ billion in one week (October 3 – 10, 2008): Tokio- 24%Brazil- 22% London- 21%Russia- 21% Frankfurt- 21%India- 19% Paris- 21%Shanghai- 13% New York - 20% 2008 – to date : ± - 40% $ 12,000 billion Capital infusions and loan guarantees $ billion Stimulous package China$ 586 billion

3 Asian growth of financial wealth 2001 – 2008 growth monetary reserves China$ 1,800 billion Sovereign Wealth Funds$ 3,000 billion History of financial crises Dow Jones 1973 – 1974 :Oil crash2-year fall 40% October 19, 1987(Black Monday) : % 3 week fall - 34% (blamed on the rise of computerized hedging strategies) 1997 – 1998 : Asian Crisis October % (Russian debt default in 1998)

4 Measuring the New Gold Bull Market

5 Gold does not run its own course as a safe haven

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7 Story of modern gold market begins with free float of gold in March 1968 central banks give up trying to defend a fixed gold price at $ 35 per ounce US Treasury closes gold window in April 1971 gold holdings of Europe central banks frozen IMF alters articles in 1978 to suspend gold as an ultimate means of settlement Central Bank Gold Agreements: first agreement (September 1999 – 2004) : sale quota of 400 tonnes per year, with an absolute limit of 2,000 tonnes over the whole 5-year period second agreement (September 2004 – 2009) - sale quota of 500 tonnes per year with an overall total of 2,500 tonnes over the whole 5-year period Asian Central Banks dont consider gold as a monetary instrument Gold holdings : 15 signatories + US:20,238 tonnes 76% Major Asian countries 2,287 tonnes 9% Others 3,936 tonnes 5% 26,461 tonnes100% Demonetization of gold

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10 Course of gold price determined by producer hedging and dehedging in last 10 years:

11 Source: World Gold Council

12 Source: World Gold Council

13 World Gold Mine Production ( 10-year comparison – in tonnes) Source: GFMS

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17 Overview of foreign gold/silver companies active in China

18 Overview of foreign gold/silver companies active in China

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21 Performance and risk associated with junior gold companies Quality and experience of management Access to financing Size and grade of projects economically exploitable Development process from: inferred resources measured and indicated resources to probable and proven resources (NI compliant) pre-feasibility bankable feasibility study Valuation of resources/reserves : ranging from $ 20 > $ 400 per ounce Joint ventures with majors acquisitions consolidation Geopolitical shift : from traditional to emerging countries - new mines, lower costs, higher political risks Environmental problems Promotional impact on valuation

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