1. Gold Mines in Purgatory until…
SEPTEMBRE 2009 1

2. Table of Contents Finance SA in a few words
We reiterate our June 2013 call: “too late to sell”
Gold bullion: let the dust settle
Gold mines vs. Gold bullion: spring cleaning is thorough
Take Away
Contacts
SEPTEMBRE 2009

3. Finance SA in a few words
Fully independent French Asset Management company – Approved by AMF* in 1990 under N° GP90098 and GP91029
Specialist of thematic equity funds with AUM of €120 million +
Added Commodities to its sectors of expertise in July 2013
Gold & Precious Metals
Energy & Natural Resources
Active management style, with direct allocation to listed stocks globally, which relies on the portfolio managers' industry sector expertise and proprietary quantitative in-house process for the quant funds.
Attractive product offer that meets investment needs of institutional investors, private banking/IFAs clientele and third party asset managers acting as allocators for multi- management funds or for individual discretionary mandates.
* Autorité des Marchés Financiers / French supervisory body
SEPTEMBRE 2009

4. Too late to Sell Maybe another shoe to drop BUT beware the rebound
Source: Bloomberg
SEPTEMBRE 2009

5. Too late to Sell Maybe another shoe to drop BUT beware the rebound
Source: Bloomberg
SEPTEMBRE 2009

6. Gold bullion: let the dust settle
Fewer Gold Discoveries and a Flat Production
Represents 189 gold deposits discovered since 1990, each with at least 1M oz. gold in reserves, or combination of reserves, resources and past production of 2 M oz. gold
Source: Metals Economics Group, Strategies for Gold Reserves Replacement 2012
SEPTEMBRE 2009

7. Gold bullion: let the dust settle
To be exacerbated going forward
Significant Gold drill results announced
Source: Metals Economics Group, Strategies for Gold Reserves Replacement 2012
SEPTEMBRE 2009

8. Gold bullion: let the dust settle
Based on slower activity on the fields AND Capex revisions
Pipeline activity index falling, validated by companies cutting their exploration budgets
Source: Metals Economics Group, Strategies for Gold Reserves Replacement 2012
SEPTEMBRE 2009

9. Gold bullion: let the dust settle
Longer Time from Discoveries to Production
Source: Metal’s Economics Group Minesearch Database & Estimates, Company Reports

10. Gold bullion: let the dust settle
Lower Average Grade and Higher Costs to Reverse?
Average gold grade of undeveloped deposits of over 1M ounces is 0.66 g/t
2012
All in costs @ USD 1,285
Q2 2013
All in costs @ USD 1,325
Source: NRH Research 2012 Ranking Gold Mines & Deposits, GOS Matrix
SEPTEMBRE 2009

11. Gold bullion: let the dust settle
While Demand Remains Elevated
* H annualized (assumes 1150 tonnes in ETFs outflows or 45% of total holdings
Source: World Gold Council
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12. Gold bullion: let the dust settle
Central Banks are Net Buyers
* H annualized (181 tonnes purchased in H1 2013)
Source: World Gold Council
SEPTEMBRE 2009

13. Gold bullion: let the dust settle
Confront massive ETFs investment selloffs
Source : World Gold Council, BofA Merril Lynch Global Commodity Research
SEPTEMBRE 2009

14. Gold bullion: let the dust settle
While unprecedented non commercial short positions (Futures) are covered
Source: Bloomberg, US Commodity Futures Trading Commission
SEPTEMBRE 2009

15. Gold bullion: let the dust settle
Structural macro issues rebalanced
The playground consisting of:
Competitive devaluations
Money supply - accelerating rate of growth as of October 2013
Consensus for more inflation
remains very supportive of a sustainable growth in the price of gold.
But short term headwinds could come from a return to more normalized real interest rates and a stronger US$. Some investment banks call for a gold price of US$1000 while appetite for Non Commercial long contracts is back to the 2008 and 2003 depressed levels of circa 14million ounces.
Source : US Federal Reserve

16. Gold mines vs. Physical gold
FACTS:
Since 2000, gold mining companies outperformed gold bullion 44% of the time (6/13,5).
After 2 years of outperformance (2009 – 2010), gold mining companies underperformed gold in 2011, 2012.
YTD, the historic leverage played admirably well on the downside with gold down 16% and gold mines down 40%.
OF IMPORTANCE:
they delivered negative absolute returns in 2011 and 2012 while gold progressed at a double digit pace
AND
they demonstrated an erosion of their excess return in uptrend markets since 2006.
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17. Gold mines vs. Physical gold
Annual Performance (net, in EUR, as of 08/30/13)
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18. Gold mines vs. Physical gold
YES, Gold mining companies are undervalued on a relative and absolute basis on many criterias:
Gold index / Gold bullion
NAV multiples
US$ value of an ounce in the ground
Mkt K / oz produced
They are fairly valued on other criterias
Historical profitability levels (operating margins, net margins)
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19. Gold mines vs. Physical gold
Gold Mines are undervalued on a historical basis (20 year horizon)
Source: Bloomberg
SEPTEMBRE 2009

20. Gold mines vs. Physical gold
Gold Mines are undervalued on a historical basis (20 year horizon)
Source: Bloomberg
SEPTEMBRE 2009

21. Gold mines vs. Physical gold
Producers vs. Juniors/Explorers
Uptrend vs. downtrend markets
Source: Bloomberg
SEPTEMBRE 2009

22. Gold mines vs. Physical gold
Gold mining companies were penalized for not being able to deliver the expected historical leverage resulting from a higher gold price since 2006.
They are today penalized because gold price is down in 2013 for the first time in 13 years.
THE REAL QUESTION: will gold mines regain their historical leverage?
ANSWER: YES UNEQUIVOCALLY
Deep unprecedented industry wide restructurings are implemented: from asset impairments ($23billion for the top 5 global producers) to asset sales or closures, to project postponements, to capex revisions.
These decisions have a double objective: rationalize the operations and reduce the dilution that plagued the industry.
SEPTEMBRE 2009

23. Gold mines vs. Physical gold
Many board of Directors made their top executives redundant: among other names, Kinross Gold, Barrick Gold Corp. Newmont Mining Corp. or d’Agnico Eagle Mines Ltd., Centerra Gold Inc. or Great Basin Gold. Same for Allied Nevada Gold Corp. and Newcrest Mining Ltd. and most recently for Alacer Gold Corp.
Unprecedented asset impairments are announced: $9,3billion for Barrick Gold Corp., $2,5billion for Kinross Gold Corp., $2,2billion for Newmont Mining, $2,6billion for Goldcorp, $5,5billion for Newcrest Mining Ltd.  
The focus remains on cost controls despite higher costs in Q2 2013: Agnico Eagle reduces K costs by $50million in 2013 and $200million in Kinross Gold Corp. reduced its headoffice headcount by 7%. Eldorado Gold Corp’s exploration spending are down 50% for 2013 and K spending are down from $670M to $430M resulting in mine expansion delays and development projects (Skouries, Certej and Olympias) delayed.
* 8% cumulative weight in the Global Gold and Precious fund
SEPTEMBRE 2009

24. Gold mines vs. Physical gold
Marginal operations are sold: Barrick Gold divested 3 Australian mines for $300million to Gold Fields Ltd. Expect more to come.
Dividends are postponed or cancelled: this is the case of Anglogold Ashanti Ltd which declared no interim dividend and announced that its dividend policy would be reviewed at year end. This is also the case of Kinross which suspended its dividend. Barrick Gold corp. cut its dividend by 75%.
The impact of a lower gold price impacted Q marginal operations. The trend was exacerbated in Q Our panel representative of the gold mining industry showed that in Q2 2013, 5 companies out of 18 reported losses vs. 1 in Q Q average gold price is lower on a sequential basis.
In this environment, financing for large and smaller mining companies is scarce. Expect more consolidations to be announced.
SEPTEMBRE 2009

25. Take Away
Positive gold sector fundamentals in place to achieve superior return despite short term strategic headwinds (interest rates, above average speculative positions, US$)
Gold mines in purgatory until the underlying metal finds a respite. Spring cleaning is thorough and unprecedented and will unquestionably be rewarded.
We will NOT pick the bottom BUT the risk reward theme for holding gold mines lies strongly on the latter due to structural improvements at the corporate level. The TREND matters most.
23 years of industry experience for the portfolio manager.
SEPTEMBRE 2009

26. Contacts Alain Corbani Portfolio Manager Head of Commodities
Tel:
FINANCE SA
13, rue Auber
Paris – France
Tel:
Internet:
SEPTEMBRE 2009

27. Disclaimer
This presentation is strictly for information purposes only. This document does not constitute an offer or commitment, a solicitation of an offer or commitment, or any advice or recommendation, to conclude any transaction (whether on the indicative terms shown or otherwise). Before entering into any transaction, you should ensure that you fully understand the potential risks and rewards of that transaction and that you independently determine that the transaction is appropriate for you given your objectives, experience, financial and operational resources and other relevant circumstances.
The prospectus of the Fund is available upon request or at
Past performance is not necessarily indicative of future results.
SEPTEMBRE 2009