Overview of the Global and Markets Philip Klapwijk Executive Chairman, GFMS Ltd.

Lima, 18th May 2010 The GFMS Group’s Unique Research Capabilities & Programme

Large and experienced team of 25 Analysts + Consultants.

Not just desk-based: Over 300 companies and organisations in 36 countries visited by our personnel in the last 12 months.

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For more information visit: www.gfms.co.uk or email: [email protected] Gold Market Overview

• Supply/Demand ‘Fundamentals’

• Investment

• Outlook for 2010 Real and Nominal Gold Prices (real US$ price in constant 2009 terms) 1800 1980 average: $1,600 2009’s average price of 1500 $972 was a record, but in real terms today’s prices are still well short of 1200 historical peaks.

900 Real Price US$/oz

600

300 Nominal Price

0

Source: GFMS, Thomson Reuters Gold Supply in 2009

2008 2009 y-o-y

Mine production 2,409 2,572 6.8%

Official sector sales 232 41 -82.2%

Old scrap supply 1,316 1,674 27.2%

TOTAL SUPPLY 3,957 4,287 8.3%

Source: GFMS (Gold Survey 2010) Gold Mine Production

Latin America Other North America China 2009 up 163t 3000 South Africa Australia or 6.8% yoy

2500

2000

1500 tonnes 1000

500

0 1981 1985 1989 1993 1997 2001 2005 2009

Source: GFMS (Gold Survey 2010) Above-Ground Stocks of Gold, end-2009 Gold is not “consumed” like most commodities; stocks can be available at the right price… Above-ground Stocks, end 2009 = 166,000t

Jewellery 52%

Lost & Unaccounted Official Holdings 2% 16%

Other Fabrication 12%

Private Investment 18%

Source: GFMS (Gold Survey 2010) Supply from Scrap, Hedging & Official Sales

Net Official Sector Sales Flat trend since 2000? Hedging Supply 2000 Scrap 1800 1600 Secular increase in supply 1987-99 1400 1200 1000

Tonnes 800 600 400 200 0 1980 1984 1988 1992 1996 2000 2004 2008

Source: GFMS Gold Demand in 2009

2008 2009 y-o-y Fabrication Jewellery 2,193 1,759 -19.8% Other 696 658 -5.4% Total Fabrication 2,889 2,417 -16.3% Bar hoarding 386 187 -51.6% Net producer de-hedging 352 254 -27.8% Implied net investment 330 1,429 332.9% TOTAL DEMAND 3,957 4,287 8.3%

Source: GFMS (Gold Survey 2010) World Gold Fabrication

4500 Developing Countries 4000 Industrialised Countries 2009 down 472t or 16% yoy 3500 3000 2500

tonnes 2000 1500 1000 500 0 1980 1984 1988 1992 1996 2000 2004 2008

Source: GFMS (Gold Survey 2010) Total Accelerated Supply from Producer Hedging*

4

Outstanding hedge book just

year 3 - 236 tonnes at end-2009

2

1 (1000s) tonnes, end

0 1995 1997 1999 2001 2003 2005 2007 2009 * outstanding forward sales, loans and net delta hedge against positions

Source: GFMS (Gold Survey 2010) World Investment* 2000 70

Value of World 60 Investment 1500 50 US$ Billions

40 1000 30 Tonnes

20 500

10

0 0 2000 2002 2004 2006 2008

*World Investment is the sum of Implied Net (Dis)Investment, Bar Hoarding and all Coins & Medals. Source: GFMS (Gold Survey 2010) World Investment* & Fabrication (excluding all coins) (1980-2010F) 4000

3500 Fabrication 3000

2500

2000 Tonnes 1500 World Investment 1000

500

0 1980 1984 1988 1992 1996 2000 2004 2008

*World Investment is the the sum of implied investment, bar hoarding and all coins & medals Source: GFMS Outlook for 2010 Gold Supply 2008-2010F

Official Sector 5000 Scrap 4500 Mine Production 4000 3500 3000

tonnes 2500 2000 1500 1000 500 0 2008 2009 2010F Source: GFMS Gold Demand 2008-2010F 5,000 Producer De-Hedging 4,500 Other Fabrication 4,000 3,500 3,000 World Investment*

Tonnes 2,500 2,000 1,500 1,000

500 • Jewellery - 2008 2009 2010F *World Investment is sum of Implied Net Investment, Bar Hoarding and all Coins & Medals Source: GFMS Gold Price Outlook

• Investment remains the principal driver of prices this year, with an investor-led breach of $1,300 a growing possibility.

• In the short-term, prices could advance from recent peaks as long as concerns remain acute over sovereign debt in Europe and the long-run stability of the Euro.

• “Resistance” from weaker fabrication demand and higher scrap supply will grow if and when price approaches (or exceeds) the $1,300 mark.

• But, at the present time (and with price in a $1,200 -$1,250 range) only a partial deterioration in these fundamental supply/demand factors.

• Imbalances in the market and excessive dependency on investment suggest that at some point the gold price will have to retreat.

• Nevertheless, this is most unlikely to occur on a secular basis in 2010 and potentially not until well into 2011 given current economic conditions and the scope for the sovereign debt crisis to widen, which will support high levels of gold investment. Silver Market Overview

• Supply/Demand ‘Fundamentals’

• Investment

• Outlook for 2010 Real and Nominal Silver Prices (real US$ price in constant 2009 terms) 60 1980 average: $54.63 50 Real Price 40

30 US$/oz

20

10

0 Nominal Price

Source: GFMS, Thomson Reuters EcoWin World Silver Supply

2008 Actual 2009 Estimated

Scrap Scrap 18% 20%

Government Government Sales Sales 2% 3%

Mine Mine Production Production 77% 80%

Source: GFMS Ltd. World Silver Supply Estimated Annual Changes: 2009 less 2008 25 20 15 10 5 0 Million ounces -5 -10 -15 Mine Production Old Silver Scrap Net Government Sales

Source: GFMS Ltd. World Silver Demand

2008 Actual 2009 Estimated

Investment Investment Coins 5% Industrial 15% 7% 51% Industrial 40% Coins Jewelry & 9% Silverware 24%

Jewelry & Photography De-hedging De-Hedging Silverware 12% Photography 1% 1% 25% 10%

Source: GFMS Ltd. World Silver Fabrication Estimated Annual Changes: 2009 less 2008

20

0

-20

-40

-60 Million ounces Million -80

-100 Industrial Jewelry & Coins Photographic Silverware

Source: GFMS Ltd. From “Deficit” to “Surplus” 950

900 DEMAND (fabrication demand) 850

800 750 SUPPLY 700 (mine production + scrap) Millionounces 650

600

550

500 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: GFMS Silver (Dis)Investment and Real Price

160 16 Real Silver Price 2009 Estimate realin silver price 120 14

80 12 Net Investment 40 10

0 8 2009

million oz -40 6 dollars/oz

-80 4 Net Disinvestment -120 2

-160 0 1985 1990 1995 2000 2005

Source: Silver Institute, GFMS Ltd. Silver Price Outlook

 Silver’s supply/demand fundamentals (excluding investment) are providing some support for higher prices in 2010, mainly due flat supply and a fair recovery in fabrication demand.

 The silver market will still remain in substantial surplus, albeit of a smaller magnitude compared with 2009. This surplus is being absorbed by investors.

 Silver like gold is now benefiting from a surge in investor interest, although there is some drag (as with the base metals) from cloudier economic prospects.

 A breach of the $20-mark is on the cards and possibly too a jump above 2008’s high of $20.92 (basis the London fix). Disclaimer

The information and opinions contained in this presentation have been obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made that such information is accurate or complete and it should not be relied upon as such. This presentation does not purport to make any recommendation or provide investment advice to the effect that any precious metals related transaction is appropriate for all investment objectives, financial situations or particular needs. Prior to making any investment decisions investors should seek advice from their advisers on whether any part of this presentation is appropriate to their specific circumstances. This presentation is not, and should not be construed as, an offer or solicitation to buy or sell precious metals or any precious metals related products. Expressions of opinion are those of GFMS Ltd only and are subject to change without notice.