Day 1- Session 3: Precious Metals Sector Gold Dynamics Objective Capital Global Mining Investment Conference 2010 Stationers' Hall, City of London 28-29 September 2010 Speaker: Angelos Damaskos - Sector Investment Managers Ltd

1. day 1 - session 3: Precious Metals sector Gold DynamicsAngelosDamaskos – Fund Manager, Sector Investment Managers Ltd.

2. GLOBAL MININGINVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations:

3. Sector Investment Managers Ltd JUNIOR Mining fund Gold dynamics presentation SEPTEMber 2010

4. Historical background to the credit crunch Productivity gains during the last decade stimulated global economic growth Shift of wealth to Emerging Markets in energy and commodities super-cycle Risk taking was encouraged whilst slack control by regulators failed to detect fraud Large high-profile cases (Madoff, AIG) but also millions of small scale fraud

6. Domino-effect triggered run on banks by speculators causing long-term investors to sell

7. Collapse of Lehman triggered massive de-leveraging and flight to US Dollar

8. Share prices were decimated and all equities were affected

9. Gold assets sold-off too in the rush for liquidity

11. 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-line growth 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

12. Gold price drivers Investors need alternative store of value to money Traditional demand stalwarts, jewellery and industrial fabrication suffer by weak 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

13. 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 other risks

14. Junior miningoeic focusing primarily in gold mining Diversified portfolio of smaller gold mining shares High conviction strategy focusing in a maximum of 40 holdings Seeks large resources in safe political areas Daily traded FSA-authorised OEIC offering an effective allocation tool Net Asset Value of £32.5 million as at 27.9.10

15. 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?

16. 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

17. GLOBAL MININGINVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations: