Correction in a secular bull market?

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2 5 reasons to be bullish for the coming decades 1. Super Cycles USA industrialization (about 40 years) 100 mn inhabitants Japan industrialization (about 20 years) 300 mn inhabitants China / India 8 years so far 3 bn inhabitants Correction in a secular bull market? BAC Africa Natural Resources Fund 2

3 5 reasons to be bullish for the coming decades 2. Demography The world is growing by more than 70 million people a year. In bn global population 3.0 bn in cities In bn of global population 5.0 bn in cities Source: BAC Africa Natural Resources Fund 3

4 5 reasons to be bullish for the coming decades 3. Urbanization and Middle Class China: 12 mn people migrate from rural to cities = 1 New York City every year! Saudi Arabia: 400 bn USD invested in 4 Dubai cities BRIC middle class (> 3,000 USD / year): mn 500 mn 1.4 bn Source: Goldman Sachs BAC Africa Natural Resources Fund 4

5 5 reasons to be bullish for the coming decades 4. Real rates will stay low 10 Peak: +8% Average: +2% Leverage and debt, systemic risk 50 years average: +2% 2 0 Peak: +8% early 80 s US Federal Funds Rate - Annual Inflation Rate Source: Datastream, as of BAC Africa Natural Resources Fund 5

6 5 reasons to be bullish for the coming decades The USD will stay weak, despite short term interventions and manipulation BAC Mining Regions Managed Vol.- South Africa (CHF) 6

7 Pt price back to its industrial status BAC Mining Regions Managed Vol.- South Africa (CHF) 7

8 Performances of BAC PGM Index in USD BAC PGM Global Index vs BAC PGM Explorers Index % +56.1% BAC PGM Global Index is a market- weighted index composed of PGM Producers & Explorers. BAC PGM Explorers Index is a market- weighted index composed of only PGM Explorers active in South Africa. BAC PGM Global Index (USD) BAC PGM Explorer Index (USD) BAC PGM Global Index BAC PGM Explorers Index % +3.8% % +16.2% % +86.7% % +95.2% YTD -43.0% -64.5% Source: Performances from to in USD BAC Mining Regions Managed Vol.- South Africa (CHF) 8

9 THE purchase of the year? Gold Junior & Explorers / bullion ratio Pt Explorers / oz ratio S&P TSX VENTURE USD/ GOLD OZ USD BAC PGM Explorer Index USD / PT oz USD BAC Mining Regions Managed Vol.- South Africa (CHF) 9 Source: Infotech, data as of Gold Junior & Explorers have never been so cheap in this cycle And Platinum?

10 The CARNAGE in Juniors and PGM Explorers Historical high % 50% Current price* 0% Platinum Australia Platmin Nkwe Platinum Sylvania Resources Ridge Mining Platinum Group Metals Anooraq Resources Jubilee Platinum Wesizwe Platinum Breamore Resources *Source: value as of BAC Mining Regions Managed Vol.- South Africa (CHF) 10

11 Spot prices used R/USD 8.0 Pt 1140 Au 902 Nickel 12.5 Pd 226 Ru 280 Copper 3.5 Rh 4325 Ir 450 Cobalt 36 Consensus prices used R/USD 8.5 Pt 1300 Au 750 Nickel 6.0 Pd 250 Ru 400 Copper 2.5 Rh 3600 Ir 400 Cobalt 20 DCF Value at real return rates (03.October 2008) Source: René HOCHREITER EXPLORERS Domicile Latest Value at 15% Real Discount Rates Best Value Currency Price Comment Spot Consensus DCF / Price at 15% Spot Anooraq CAD 125 Market underestimating value, large resource % Ridge Mining GBP 52 Sheba's Ridge value underestimated by market, low cost % Sylvania AUD 102 Dump re-treatment and Everest North - small but profitable % AIM Resources AUD 2 Grasvaly prospect - low grade of concern, highly % PTM CAD 144 Good grades and shallow resource % Platmin CAD 329 Small projects, but reasonably good quality, open-pittable % Wesizwe ZAR 267 Deep, good grade but will have high costs % Jubilee GBP 27 Single Project, good grades, medium depth % Eastern Platinum CAD 81 Broken ground, difficult to mine % Platinum Australia AUD 168 Small low grade deposits, open pittable, low cost % Caledonia Mining GBP 6 Mainly gold and Grasvally property - PGMs and nickel % Nkwe AUD 42 Garatouw project undervalued % Lesego Platinum ZAR Not listed New area, structure, dip,depth may be difficult for mining Braemore Res. ZAR 69 New PGM smelting process, dependent on new contracts Not Valued Consolidated Puma CAD 24 In Kola peninsula, Russia. Part of Bema Gold Not Valued Platinum Group of India RUP n/a Recycling business. Not Valued Beartooth CAD 4 In Stillwater Complex. Low value due to high Pd content. Not Valued Average 125 % PRODUCERS Domicile Latest Value at 15% Real Discount Rates Best Value Currency Price Comment Spot Consensus DCF / Price at 5% Spot Aquarius ZAR 45 Fairly valued - needs to do more deals % Anglo Platinum ZAR 766 Undervalued. Cost controls have been a problem. Going well % Implats ZAR 162 Undervalued, has dilution problems % Lonmin ZAR 373 Expensive, lack of face length problems appearing % Northam ZAR 47 Fairly valued - BEE deal with AngloPlats is in the price % Average 60 % BAC Mining Regions Managed Vol.- South Africa (CHF) 11

12 AUD / USD CAD / USD ZAR / USD 7.97 GBP / USD 1.81 USD Per ounce Valuation (4 PGMs) Less preferred valuation method Source: René HOCHREITER EXPLORERS Domicile Latest Market Market Resources Valuation Currency Price Shares Issued Cap (Mil) Cap (Mil) Mil Ozs. USD / oz Resource (cps or pps) Domicile Currency In USD / oz 4 PGMs 4 PGMs Ridge Mining GBP Anooraq CAD Jubilee GBP Nkwe Platinum AUD Eastern Platinum CAD Wesizwe* ZAR PTM CAD Platmin CAD AIM Resources AUD Platinum Australia AUD Caledonia Mining GBP Sylvania AUD Consolidated Puma CAD 24 n/a n/a n/a n/a n/a Platinum Group of India RUP n/a n/a n/a n/a n/a n/a Beartooth USD 4 n/a n/a n/a n/a n/a Simple Average / Total *Takes account of the issue of 62m shares for Africa Wide PRODUCERS ZAR per Share Northam ZAR Anglo Platinum ZAR Aquarius ZAR Lonmin ZAR Implats ZAR Simple Average / Total BAC Mining Regions Managed Vol.- South Africa (CHF) 12

13 Middle East Oil reserves vs Platinum reserves in the Bushveld An amazing comparison! Bushveld Complex Size: 50,000 km2 PGMs estimated resources: USD 30 trn 2006 United Arab Emirate (UAE) Size: 83,600 km2 Proven Oil Reserves: USD 8 trn Saudi Arabia Size: 1,960,582 km2 Proven Oil Reserves: USD 20 trn BAC Mining Regions Managed Vol.- South Africa (CHF) 13

14 Tightening emissions legislation technology will change, impacting metal demand Source: SFA estimates BAC Mining Regions Managed Vol.- South Africa (CHF) 14

15 Platinum Demand/Supply Outlook 000 oz Demand Total 7,030 7,280 8,232 10,420 12,697 of which: Autocats 4,225 4,450 4,961 6,939 8,534 Jewellery 1,585 1,700 2,000 2,476 3,200 Supply Total 6,550 6,524 7,385 10,114 12,739 of which: AngloPlat 2,400 2,240 2,574 3,100 3,482 Implats 1,600 1,550 1,620 1,700 1,830 Supply shortfall/surplus Source: René HOCHREITER BAC Mining Regions Managed Vol.- South Africa (CHF) 15

16 Risks Souh Africa Zuma? Power shortage Economy: but still 4% growth Current-account deficit: need 3bn ZAR a week Poverty: crime HIV unemployment Another Swiss Franc Surprise Stock Market Crash Worldwide 80% margin = shock absorber Producers pay high dividends 60% of the demand forced by more legislative restrictions China Olympics 2008 Stock-market correction is over? World recession This time is different for Pt Follow Equity Markets Substitution Autocats Fuel cell + - 1% budget surplus (2007) Surpluses 2008 / 2009 / 2010 Debt ratio to GDP = 17% in 2010 Company tax rate down 1% to 28% 2010 Weaker rand BAC Mining Regions Managed Vol.- South Africa (CHF) 16

17 Prospects for the coming 12 months + - More corporate activities in the explorers Fundamentals of Pt Correlation with Au $ potential weakness Margin of producers Another global bear wave How long the deleveraging Delays Financing / dilution South African political transition BAC Mining Regions Managed Vol.- South Africa (CHF) 17