Guanajuato, Mexico: a town built with the silver of the surrounding mines!

Transcription

1 Guanajuato, Mexico: a town built with the silver of the surrounding mines!

2 Disclaimer The Sierra Madre Gold and Silver Venture Capital Fund (Sicav) PLC makes every effort to maintain the accuracy of the information on this presentation but cannot accept responsibility for any prejudice, loss or damage which may occur from use of the information. The information on the presentation is not to be interpreted as a substitute of the Fund's Prospectus and users are strongly advised to seek professional advice accordingly. The Sierra Madre Gold and Silver Venture Capital Fund (Sicav) PLC does not provide quality control of any third parties mentioned in the presentation, and the inclusion of any third party within the presentation should not be construed as a recommendation of that third party. If you find anything on this presentation that causes concern please contact us. Investment in the Fund should be regarded as a long-term investment, and as such it is subject to normal market and currency fluctuations and the risks inherent in all investments. The price of Shares and the income from them (if any) can, from time to time, go down as well as up and investors may not realize the amount of their initial investment. The Fund invests in the securities of smaller companies in the precious metals sector, and this can involve greater risk and volatility than is customarily associated with investment in larger and more established companies in less volatile sectors. Moreover, the reduced sectorial diversification of the underlying assets of the Company is to be considered as a risk in itself. In general this is to be considered as a high risk/high reward fund. Investment in the Fund is suitable for investors who are pursuing a long term strategy, who are looking to add an aggressive component to their portfolio and who are willing to accept higher risks of investing in a sector of the stock market in exchange for long-term returns and/or who have certain experience relating to investments. Investors who are in any doubt about the risks of investing in the Company should consult their own financial advisors in order to seek professional advice on the suitability or otherwise of investing in the Company. 2

3 Contents Page 4: The Fund Managers Page 6: Why Precious Metals Page 11: Market for Gold Page 13: Gold Outlook Page 14: Silver Price Drivers Page 15: Why Precious Metal Mining Stocks Page 20: Where to invest: The Junior Advantage Page 22: The Sierra Madre Gold & Silver Venture Capital Fund Page 29: The Future Page 32: The Directors Page 33: Technical Data Page 35: Contacts 3

4 Fund Management Peter Zihlmann - Asset Manager and Chairman of the Board Peter is also the majority shareholder and CEO of P. Zihlmann Investment Management Ltd (the Investment Manager). After a successful thirty-year banking career with different prime banks, and with a reputation as an experienced asset manager, he built up P. Zihlmann Investment Management Ltd, based in CH-Zurich in Since then he has established himself as an international expert in precious metal investments. His company is an active member in the Swiss Association of Asset Managers (SAAM). Peter Zihlmann is the author and publisher of several studies of mining companies. peter.zihlmann@pzim.ch 4

5 Why Precious Metals 5

6 Gold Price Drivers What is driving the price of Gold and pushing Gold Demand Flight to safety by individual investors due to excessive printing of paper money Global imbalances: US and European debt burden and huge US trade deficit Global foreign currency reserves are excessive gold reserves low: as a consequence central banks have become net buyers of gold Mine supply is flat and cannot satisfy increasing demand Investment demand and jewellery demand are growing strongly, especially in India and China Debt crisis is rapidly worsening. No solution in sight to European sovereign debt crisis 6

7 Billions of US-Dollars The Printing Press is running hot 11'000 10'000 9'000 M2 Money Stock 24. Dec. 2012: USD Billion 8'000 7'000 6'000 5'000 4'000 3'000 2'000 1'000 Source: Federal Reserve Bank of St. Louis The creation of additional paper money (in USD, EUR and YEN) is accelerating. As interest rates stay low and real rates even negative the ingredients for massive future inflation are coming together. Gold is the only currency which cannot be inflated by a central bank and that has no sovereign risk from an indebted country! 7

8 The Debt Crisis Will Greece leave the Euro? When will the US hit the next debt ceiling? Will the US fall over the fiscal cliff? Chappatte, NZZ am Sonntag There is no foreseeable solution to the debt crisis in Europe and the USA. Solving the debt crisis with more debt is no long-term solution. Can inflating the system be a solution? Uncertainty will prevail! Buying gold serves as safe-haven investment. 8

9 Tonnes Politics of Gold: Central Banks buying China, India, Russia and other emerging countries have indicated that they will further increase gold reserves. Central banks have become a steady buyer of gold. Gold and foreign exchange as a percent of total central bank reserves. China has less than 5% gold of total reserves: Change in the gold holdings of all central banks show massive increase is a new record year: Source: World Gold Council 9

10 Market for Gold: Supply Restraints Global demand for gold has risen the past 10 years, production has stagnated. Gold production is more expensive and replacing resources more difficult Demand has been driven by ETFs and investors purchasing physical bullion. Previous selling of government gold reserves has reversed. Recycling is not growing, not even at higher prices. Mining Production (Source: GFMS) Average gold grade and global new gold discoveries since 1960 (Source: CPM) 10

11 in thousand ounces in thousand ounces Market for Gold: Demand Growth Gold Demand: Growing strongly in India & China Gold Demand in India Gold Demand in China Source: CPM, Bloomberg 11

12 Gold Outlook: Higher Prices How high could the gold price go? Inflation adjusted last peak gold price of 1980 equals to USD 2,300. During the 30s and the 70s the relation of the DJIA and gold fell to 2:1; this equals today a Gold price of USD 6,300. Floor of the gold price to increase to USD 1,200 due to higher production costs and inflation. We believe that gold has been and will be a better investment than paper-money. 12

13 Silver Price Drivers: to follow in Gold s Footsteps Recovery in Industrial Demand (growing new uses in electronics, photovoltaic, medicine) On-going robust growth in India and China Strong Investment Demand in wake of gold (poor man s gold) Historic Correlation with Gold is over 80% The current gold-silver ratio is below average Silver price development over the past 30 years 2001 until today: 650% in USD 13

14 Why Precious Metals Mining Stocks Rio Tinto in southwestern Spain: Iberians and Tartessians started to mine the site in 3,000 BCE 14

15 Gold to Gold Equity Ratio: Historic Extremes The extremes offer a unique opportunity The valuations of mining companies in regards to the gold price have reached historic lows. This is a massive deviation from historic means. 15

16 Price to Net Asset Value: Historic Extremes Because of the price decline in these stocks and the strong performance of gold, investors have the opportunity to purchase gold mining equity at historic low valuation levels (P/NAV). The explorers & developers, often referred to as juniors, are valued at about only half of the company s net asset value (NAV). The chart shows that the current price-to-nav level of gold mining equities is at record low levels levels not even seen during the financial crisis of

17 Playing the Junior Value Curve Source: lkconsult An exploration and mining project life cycle includes stages as described above, which can significantly increase a company valuation. The graph is a qualitative representation of a mining project value curve (i.e. stock price movement). The highest potential returns stands in the development of promising early stage exploration projects. 17

18 The Take-Over Potential of Juniors As producing companies (the seniors) have more and more difficulties finding new gold and therefore replacing their depleting reserves, they are looking at junior companies for growth. Good juniors will be potential take-over candidates of the seniors in the future. The most promising junior explorers are usually bought out by major producers. Take-over targets promise substantial stock price increase. 18

19 Where to Invest: The Junior Advantage Which company promises the optimal capital gains, big or small ones? Barrick Gold? Kinross Gold? Gold Resource? Market Cap $ 40B Market Cap $ 12B Market Cap $ 1.4B UP 315% in 12 years UP 805% in 12 years UP 2,800% in 6 years Small companies have the potential to grow much faster! 19

20 Where to Invest: The Junior Advantage Small companies turning into mid-size producers offer substantial upside! UP 12,400% in 7 years What makes the difference: Management committed to building a mine Choosing good projects Choosing good location Realistic and stable financing Organic, self-financed growth Resource and production expansion Good investor relations First Majestic Silver Corp. is a good example. From IPO to Production: Share price up over 12,000% 20

21 The Sierra Madre Gold & Silver Venture Capital Fund 21

22 The Fund The Sierra Madre Gold & Silver Venture Capital Fund (SICAV) Plc. was licensed by the Maltese Financial Services Authority (MFSA) as collective investment scheme on September 19, 2007, and organized as a multi-class investment company with variable share capital under the laws of the Republic of Malta, according to the Investment Services Act, 1994, as a Professional Investor Fund ( PIF ) targeting Experienced Investors The fund invests in: 1. Precious metals producers with a focus on Mexico and Latin America 2. Emerging producers and 3. Explorers Our investment decisions are based on direct contact with the management, on-site visits and careful analysis of the fundamentals of the companies. 22

23 The Fund Our strategy simple but timeless: Diversification: production, development, advanced exploration Diversification: focus on Mexico and other Latin American countries Undervalued companies Selection of 20 different companies Concentration on small and middle-sized companies with strong growth potential Investment decisions based on direct contact with the management, on-site visits and careful analysis of fundamentals Stability of country s political system rule of law as far as possible Countries with a long history of mining 23

24 The Fund A Professional Investor Funds (PIF) PIFs are for all intents and purposes regular Collective Investment Schemes, but with certain defining characteristics that render them more akin to alternative investment funds and accordingly are subject to lighter regulation. THE SIERRA MADRE GOLD & SILVER VENTURE CAPITAL FUND is a PIF promoted to Experienced Investors (Investor criteria apply and a Minimum investment of CAD 15,000). PIFs are not subject to any restrictions on their investment. A PIF promoted to Experienced Investors, while maintaining a sensible diversification, can focus its investments on the best potential for capital appreciation. The PIF offers capital appreciation potential which is not possible with retail funds due to their imposed regulatory restrictions. 24

25 The Fund Management The Timeless Precious Metal Fund is managed by a team of portfolio managers and analysts who are recognized for their investment expertise in the Junior Gold and Silver Mining sector. The team-based approach allows us to discover attractive investment opportunities for our fund investors. When an emerging investment opportunity is identified, we invest with conviction and a long-term time horizon. Our fundamental company research approach includes visiting the mining projects on site, speaking to geologists and mining engineers. 25

26 Stable Political Situation We invest in countries where the rule of law prevails. Concentration of investments in Mexico and Rest of South America. Selected countries in Europe and Asia Country allocation of the fund by incorporation: Country allocation of the fund by operations: 26

27 in CAD The Past... NAV - Sierra Madre Gold and Silver Venture Capital Fund Since low 2008: +494% SIERRA MADRE GOLD AND SILVER FUND (CAD) SIERRA MADRE GOLD AND SILVER FUND (USD) GOLD & SILVER INDEX - PHILADELPHIA AMEX GOLD BUGS INDEX

28 The Future Where could our fund s price be in four years? We are prudent and we will assume that the price of gold will only double over the next four years from the present price (see also page 13) The share prices of junior gold and silver companies may meanwhile multiply by 5 at least from the presently depressed level, if we take the last 10 years as our reference. 28

29 The Future Stocks go up faster than gold over the long-term Gold: +570% Gold stocks: +1,500% 29

30 The Future What is driving The Sierra Madre Gold and Silver Venture Capital Fund over the coming 3 to 4 years: Higher gold price Re-valuation of extremely cheap stocks (in relation to the value of gold within their resource base) Industry consolidation (take-overs) on production or exploration success Our focus on explores bringing new (and much needed) new resources into production within next couple of years Our focus on (future) producers with realistic projects (financial and geopolitical aspects) and below average production costs Conclusion: We lay the basis for unprecedented Capital Gains 30

31 The Directors Peter Zihlmann - Asset Manager and Chairman of the Board Peter is also the majority shareholder and CEO of P. Zihlmann Investment Management Ltd (the Investment Manager), founded in 1994, with over thirty-years experience as an asset manager with different prime banks. pzihlmann@timeless-funds.com Dr. David E. Griscti - Fund Secretary and Director Dr. Griscti is a founding partner of the law firm DAVID GRISCTI & ASS. and the corporate-trusts-tax services and advisory firm QUBE SERVICES LIMITED. He holds a doctorate degree in law (LL.D) from the University of Malta and a Masters degree in Securities, International Tax and International Finance Law (LL.M) from the University of London. His area of practice is predominantly financial services law. dgriscti@timeless-funds.com 31

32 Technical data The Sierra Madre Gold & Silver Venture Capital Fund (SICAV) Plc. ISIN Swiss Security-N / Bloomberg Code Fund Manager MT / SMGSVCF MT Timeless Asset Management, Malta info@timeless-funds.com Reference Currency CAD (Minimum investment CAD 15,000) Domicile Malta (EU) License Capital (31/12/2012) Custodian Bank Accounting & Administration Auditors CAD 2.6 Million Bank of Valletta, Malta Valletta Fund Services, Malta PriceWaterhouseCoopers, Malta 32

33 Gold s Past «Monetary policy, unleashed from the constraint of domestic gold convertibility, has allowed a persistent over issuance of money. «Alan Greenspan, Federal Reserve Chairman USA, ««Gold has worked down from Alexander's time. When something holds good for two thousand years I do not believe so because of prejudice. «Bernard Baruch, American Financier ( ) 33

34 Contact Peter Zihlmann Phone: and Websites: Address: 168 St. Christopher Street, Valletta VLA 1467, Malta 34