Presentation on theme: "CPM Group Precious Metals and Commodities Research, Consulting, and Merchant Banking Internet Initiatives for Precious Metals and Diamonds Russian Precious."— Presentation transcript:
CPM Group Precious Metals and Commodities Research, Consulting, and Merchant Banking Internet Initiatives for Precious Metals and Diamonds Russian Precious Metals and Gemstones Conference Moscow November 2001
Internet Initiatives for Precious Metals and Diamonds n The internet will have enormous roles to play in precious metals and diamonds. n The roles will range from the wholesale to the retail markets. n Some early successes are being registered, even as ill-conceived efforts fail.
EPM and Private Diamonds LLC. Two CPM Group clients have interesting programs. n Electronic Precious Metals LLC is creating a precious metals trading platform. n Private Diamonds LLC has been selling high-end diamond jewelry via the internet for three years, profitably.
Electronic Precious Metals (EPM) n Electronic Precious Metals (EPM) was founded in 2000 to develop an internet- based precious metals trading environment. n Consortium of market users. n EPM is being managed by CPM Group.
EPM Founding Shareholders and Supporting Companies n Apex Silver Mines n Demet Deutsche Edelmetall Recycling AG n Eastman Kodak Co. n Garfield Refining n Heraeus Precious Metals Management, Inc. n Kaye Refining n KGHM Polish Copper Limited n Minas Luismin n RAO Norilsk Nickel n Pan American Silver Corp. n Zimbabwe Platinum Mines Ltd.
Problems with Precious Metals Trading At Present n Highly fragmented markets, with literally thousands of market participants widely dispersed around the world. n Conditions in the precious metals markets are bad and getting worse. n Liquidity -- the key to success of any market -- has been falling sharply. n Imperfect information. The markets are not transparent.
EPM will provide a nucleus for these fragmented markets n EPM will provide a forum for market participants to transact their business n Market neutral. n Users of EPM will have access to more transparent pricing information, resulting in more efficient markets.
Potential Revenue n Revenues will be derived from a number of registration fees, transaction fees, and ancillary services. n Internal Rate of Return: EPM can earn in excess of 600% return on capital in the first five years of operation if it captures only 1% of the market. A much larger market share is anticipated, with much higher rates of returns as a result.
Advantages of EPM n Increased market liquidity from the outset. n CPM Group’s already market-neutral position will help it to build this liquidity. n EPM/CPM has built up a consortium of support of market users rather than market makers.
Advantages of EPM (cont.) n EPM is not locked into any costly technology contracts at present. n EPM is not capital intensive. n EPM is not seeking to replace any market participants. It is seeking to create a more efficient way to conduct current business, in terms of both cost and time. It has not been viewed with hostility, as some other initiatives have.
Plan to Launch EPM n Funding n Hire CEO/CTO from technology sector; President from precious metals industry. n Building market participation will be the most time consuming aspect of the rollout. n Registration and qualification processes determined. n Beta testing n Launch
Private Diamonds, LLC. n Private Diamonds has a proven model for selling high-end diamond jewelry via the internet.
Private Diamonds, LLC. Profits margins of 27% - 41% over past three years. n Projected margins of 33%. n Projected return on $3 MM investment of 33%.
Private Diamonds, LLC. n Fourth largest diamond jewelry seller on the internet today. n Superior pricing, service, delivery, and operations.
Some of the Elements Necessary for Success of Internet Ventures n Adherence to classical business principals. n Keep costs low. n Replicate existing markets, while… n Improving the markets’ efficiencies. n Be inclusive, not exclusive. n Liquidity, depth and breath of market, is crucial from the outset.