Gold

Gold: The Perfect Metal

Golden Era: Growing Potential in Gold Investment Forum Hong Kong

22 June 2009

Owen Hegarty

Chief Executive Officer G-Resources (1051 HK)

Table of Contents

SECTION 1

Gold- The perfect metal: The key characteristics of gold

SECTION 2

Success factors for gold mining: What to look for when investing in gold companies

SECTION 3

Gold companies as an investment

2

Table of Contents

SECTION 1

Gold- The perfect metal: The key characteristics of gold

SECTION 2

Success factors for gold mining: What to look for when investing in gold companies

SECTION 3

Gold companies as an investment

3

Gold - The perfect metal: The key characteristics of gold

► It's a commodity ► It's a currency ► It's a store of value ► It's a hedge against inflation, financial instability and geopolitical uncertainty

Gold outperforms during period of rising and high inflation

4

Gold is rare, hard to find & getting harder to find

► Over half of global exploration expenditure is on gold ► Yet few large gold discoveries have been made in the past 10 years ► Lack of focus on Asia represents an opportunity Major gold deposits discovered in the Western World between 1950 and 2003

World 4%

World Exploration Spend

Asia

Asia attracts only 4% of global exploration expenditure = great opportunity

Source: BHP Billiton 5

Gold demand steady but forecast to rise with increases in wealth in China and India

6 6

Primary gold supply from the world's mines is declining and has been for the past six years

► This relates in part to the fact that quality economic gold deposits are few and far between. ► Confirmation of this claim: world gold production has been steadily declining since it peaked in 2001 in spite of a nearly US$600 rise in the gold price. This goes against basic economic theory i.e. rising prices should bring on more production

7 7

Strong Gold Price Outlook

► Strong physical demand outlook , subdued supply ► Central Banks and hoarders looking to accumulate ► A global financial environment which includes inflation, a weakening US$ and continuing uncertainty ► Geopolitical instability Gold Historical & Forward Price US$ / oz

1,000 900 800 700 600 500 400 300 Jan-04 Spot 953 974 992 1 begin_of_the_skype_highlighting 953 974 992 1 end_of_the_skype_highlighting,023

Forward Curve from Bloomberg based on gold spot price as of 2 June 2009

Sep-04 May-05 Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 2009E 2010E 2011E Jan-10 Sep-10 May-11 2012E

Forward

Source: Bloomberg as of 2 June 2009

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Table of Contents

SECTION 1

Gold- The perfect metal: The key characteristics of gold

SECTION 2

Success factors for gold mining: What to look for when investing in gold companies

SECTION 3

Gold companies as an investment

9

Success factors for gold mining: Technical factors to look for when investing in gold companies

► Grade is still king The global average recovered gold grade from the worlds mines is declining, from 1.7g/t in 2004 to 1.4g/t in 20081 So seek projects and companies that have mine grades better than average ► Scale Any mining project should have scale in terms of gold production capacity, mining rate and resource base ► Metallurgy Gold grade can be high but you have to be able to extract it ► All these factors considered together contribute to the fundamentals of a successful mining project- it should be: Largish Long mine life Low cost ► Needs to have upside Capacity to increase production rates Exploration upside Regional Upside

1. CIBC World Markets 10 10

Success factors for gold mining: Macro/country factors to look for when investing in gold companies

► Successful projects occur in areas with: Stable, secure domains Domains where mining is acceptable Where there is access to ground and little competing land use Where there is access to infrastructure Where the cost base is low

Ghana Uzbekistan 3% 3% Indonesia Canada 4% 4% Russia 7% Papua New Chile Mexico Guinea 2% 2% 3% Brazil 2% Other countries 19% China 13% Peru 7% South Africa 11%

Australia 10%

United States 10%

2008 World gold production by country

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Table of Contents

SECTION 1

Gold- The perfect metal: The key characteristics of gold

SECTION 2

Success factors for