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Shift in gold production from traditional to emerging countries Marino G. Pieterse

Shift in gold production from traditional to emerging countries Marino G. Pieterse Editor Gold letter International. Greenland Sustainable Mineral &Petroleum Development Conference Copenhagen May 4 – 6, 2009. Measuring the New Gold Bull Market.

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Shift in gold production from traditional to emerging countries Marino G. Pieterse

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  1. Shift in gold production from traditional to emerging countries Marino G. Pieterse Editor Goldletter International Greenland Sustainable Mineral &Petroleum Development Conference CopenhagenMay 4 – 6, 2009

  2. Measuring the New Gold Bull Market

  3. Gold does not run its own course as a safe haven

  4. Demonetization of gold ■ Story of modern gold market begins with free float of gold in March 1968 central banks give up trying to defend a fixed gold price at $ 35 per ounce■ US Treasury closes “gold window” in April 1971 gold holdings of Europe central banks frozen■ IMF alters articles in 1978 to suspend gold as an ultimate means of settlement■ Central Bank Gold Agreements:first agreement (September 1999 – 2004) : sale quota of 400 tonnes per year, with anabsolute limit of 2,000 tonnes over the whole 5-year periodsecond agreement (September 2004 – 2009) - sale quota of 500 tonnes per year with an overall total of 2,500 tonnes over the whole 5-year period■AsianCentral Banks don’t consider gold as a monetary instrument(as per December 2008)Gold holdings : 15 signatories + US: 20,183 tonnes 76%Major Asian countries 2,287 tonnes 9%Others 3,884 tonnes5% 26,354 tonnes 100%

  5. Related to currency basket of the US dollar index (57.6% in euro’s, 13.6% in Japanese yen, 11.9% in British pounds, 9.1% in Canadian dollars, 4.2% in Swedish crones and 3.6% in Swiss francs). Since the index went up in 1995 from a long term resistance level of 80 to a high of 120 in 2001, at the time the euro was introduced, it dropped to a low of 72 in March 2008, but has been followed by a strong upward correction to $ 87 well above the historic resistance level.

  6. World official gold holdings and total monetary reserves

  7. World Gold Mine Production (10-year comparison – in tonnes) Source: GFMS

  8. Performance and risk associated with junior gold companies • Access to financing • Size and grade of projects  economically exploitable • Development process from: inferred resources  measured and indicated resources to probable and proven resources (NI 43-101 compliant) pre-feasibility  bankable feasibility study • Valuation of resources/reserves : ranging from $ 40  > $ 400 per ounce • Joint ventures with majors  acquisitions  consolidation • Geopolitical shift : from traditional to emerging countries - new mines, lower costs, higher political risks •Environmental problems • Promotional impact on valuation

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