Shift in gold production from traditional to emerging countries Marino G. Pieterse

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$ 1.000 billionGlobal 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 $ 6.200 billionin 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 $ 1.400 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 billionHistory of financial crises Dow Jones • 1973 – 1974 : Oil crash 2-year fall 40% • October 19, 1987 (Black Monday) : - 22.6% 3 week fall - 34%(blamed on the rise of computerized hedging strategies) • 1997 – 1998 : Asian CrisisOctober 1997 - 11%(Russian debt default in 1998)

4. Measuring the New Gold Bull Market

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

7. Demonetization of gold ■ 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 anabsolute limit of 2,000 tonnes over the whole 5-year periodsecond 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■AsianCentral Banks don’t consider gold as a monetary instrumentGold holdings : 15 signatories + US: 20,238 tonnes 76%Major Asian countries 2,287 tonnes 9%Others 3,936 tonnes5% 26,461 tonnes 100%

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

17. Overview of foreign gold/silver companies active in China

18. Overview of foreign gold/silver companies active in China

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 43-101 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