Global Gold & Precious

snowpeaschocolateManagement

Nov 18, 2013 (3 years and 6 months ago)

130 views

June

2013

Global Gold &
Precious

2

Table of Contents


Commodities AM in a few words

Too late to sell

Gold bullion:
b
ack to basics

Gold mines vs. Gold bullion

Global Gold and Precious

Investment process

Portfolio snapshots

Performance

Fund management team

Fund terms

Take
-
Away

Contacts



3

Commodities AM in a few words



Fully independent French Asset Management company


Approved by AMF* under N
°

GP97016


Specialist of thematic equity funds:


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


12
-
year track
-
record, with first
-
class French industry awards


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

4

Too late to Sell


“Be
Fearful When Others Are Greedy and Greedy When Others
Are
Fearful”

Source :
Wall Street Journal, Financial Times

5

Too late to Sell


“Be
Fearful When Others Are Greedy and Greedy When Others
Are
Fearful”

Source: Bloomberg

6

Too late to Sell


“Be
Fearful When Others Are Greedy and Greedy When Others
Are
Fearful”

Source: Bloomberg

7





Gold
bullion:
back to basics


Fewer Gold Discoveries and a Flat Production

Source:
Metals Economics Group,
Strategies for Gold Reserves Replacement 2012

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

8





Gold
bullion:
back to basics



Significant

Gold drill
results

announced

With

no
improvement

in
sight

Source:
Metals Economics Group,
Strategies for Gold Reserves Replacement 2012

9





Gold
bullion:
back to basics



Pipeline activity index falling, validated by companies cutting their exploration budgets

Based on slower activity on the fields

Source:
Metals Economics Group,
Strategies for Gold Reserves Replacement 2012

10

10

Longer Time from Discoveries to Production

Gold
bullion
: back to basics

Source: Metal’s
Economics
Group Minesearch Database


& Estimates, Company Reports

11


Lower
A
verage Grade and
H
igher Costs

Gold
bullion:
back to basics

Source: NRH Research 2012 Ranking Gold Mines & Deposits

2012


All in
costs


@ USD 1 285*



* GOS
Matrix



Average gold grade of undeveloped deposits of over 1M ounces is 0.66 g/t

12

Jewellery
Total bar
and coin
invest
ETFs and
similar
Tech-
nology
Central
banks
Total
Jewellery
Total bar
and coin
invest
ETFs and
similar
Tech-
nology
Central
banks
Total
2003
2,484
304
386
-620
2,594
29.0
3.6
4.5
-7.2
30.3
2004
2,616
355
133
419
-479
3,044
34.4
4.7
1.7
5.5
-6.3
40.0
2005
2,719
396
208
438
-663
3,098
38.9
5.7
3.0
6.3
-9.5
44.3
2006
2,300
414
260
468
-365
3,077
44.6
8.0
5.1
9.1
-7.1
59.7
2007
2,423
435
253
476
-484
3,104
54.2
9.7
5.7
10.6
-10.8
69.4
2008
2,304
869
321
461
-235
3,720
64.6
24.4
9.0
12.9
-6.6
104.3
2009
1,814
780
623
140
-34
3,593
56.7
24.4
19.5
12.8
-1.0
112.3
2010
2,017
1205
382
466
77
4,147
79.4
47.5
15.0
18.3
3
163.3
2011
1,972
1515
185
453
457
4,582
99.6
76.6
9.4
22.9
23.1
231.5
2012
1,908
1256
279
428
535
4,405
102.4
67.4
15.0
23.0
28.7
236.4
2013*
3,852
202.1
Tonnes
US$Bn
Gold
bullion:
back to basics

While Demand remains elevated

Source: World Gold Council

* Q1 2013 annualized (assumes 700
tonnes

in ETFs outflows, or 25% of total holdings)

13

Gold
bullion:
back to basics

Central Banks are Net Buyers

Source: World Gold Council

-
547
-
620
-
479
-
663
-
365
-
484
-
235
-
34
77
457
534.6
437
-
800
-
600
-
400
-
200
0
200
400
600
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013*
* Q1 2013 annualized (109 tonnes purchased in Q1 2013)

14

Gold
bullion:
back to basics

Confront short term ETFs investment selloff headwinds mainly from IAs

Source :
World Gold Council,
BofA

Merril

Lynch Global Commodity Research

19
79
36
-
3
139
80
73
4
149
95
465
68
42
42
6
296
50
30
-
61
54
87
104
53
0
136
88.1
-
176.9
-
300
-
200
-
100
0
100
200
300
400
500
Q3
-
06
Q4
-
06
Q1
-
07
Q2
-
07
Q3
-
07
Q4
-
07
Q1
-
08
Q2
-
08
Q3
-
08
Q4
-
08
Q1
-
09
Q2
-
09
Q3
-
09
Q4
-
09
Q1
-
10
Q2
-
10
Q3
-
10
Q4
-
10
Q1
-
11
Q2
-
11
Q3
-
11
Q4
-
11
Q1
-
12
Q2
-
12
Q3
-
12
Q4
-
12
Q1
-
13
15

Gold
bullion:
back to basics

And extreme non commercial short positions (Futures only)

Source: Bloomberg, US Commodity Futures Trading Commission

16

16

Gold
bullion:
back to basics

Structural macro
i
ssues intact...


The playground consisting of:


1.
Competitive devaluations


2.
Low real interest rates and


3.
Money supply (decelerating rate of growth presently)


remains

very

supportive

of

a

sustainable

growth

in

the

price

of

gold
.

Any

reacceleration

of

the

money

supply

will

stress

the

depth

of

the

uptrend
.


Source :
US Federal Reserve

17

17

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

and

YTD
.


MUCH

WORSE
:



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
.


18

Gold mines vs. Physical gold

Annual Performance
(net, in
USD,
as of
04/30/13)

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
FTSE Gold Mines (in EUR)
-6.44%
27.97%
29.60%
18.57%
-13.70%
47.59%
0.85%
8.29%
-15.25%
25.23%
39.11%
-13.13%
-17.07%
-37.67%
Physical Gold (in EUR)
-1.77%
7.07%
4.17%
1.08%
-3.08%
35.81%
11.00%
17.72%
10.99%
21.51%
38.10%
14.98%
3.64%
-15.36%
FTSE Gold Mines vs Physical Gold
-4.67%
20.90%
25.43%
17.49%
-10.62%
11.79%
-10.15%
-9.43%
-26.24%
3.72%
1.01%
-28.10%
-20.71%
-22.31%
-
40%
-
30%
-
20%
-
10%
0%
10%
20%
30%
40%
50%
60%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
FTSE Gold Mines vs Physical Gold
19

19

Gold mines vs. Physical gold



YES
, Gold mining companies are undervalued on a relative and absolute basis on many
criterias:


Gold index / Gold bullion


Historical profitability levels (operating margins, net margins)


NAV multiples


US$ value of an ounce in the ground


Mkt K / oz produced

20

20




Gold Mines are
undervalued on
a
historical

basis (20
year

horizon)

Gold mines vs. Physical gold

Source: Bloomberg

21

21




Gold Mines are
undervalued on
a
historical

basis (20
year

horizon)

Gold mines vs. Physical gold

Source: Bloomberg

22

22




Producers
vs

Juniors/Explorers


Uptrend vs.
downtrend
markets

Gold mines vs. Physical gold

Producer Index

GDM (NYSE
Arca

Gold
Miners

Index)

Explorer Index

MVGDXJ (
Mkt

Vector

Junior Gold
Miners

Index)

Source: Bloomberg

23

23




Juniors are close
to technical
capitulation
levels

Gold mines vs. Physical gold

Producer Index

GDM (NYSE
Arca

Gold
Miners

Index)

Explorer Index

MVGDXJ (
Mkt

Vector

Junior Gold
Miners

Index)

Source: Bloomberg

24

24




So are the
Seniors

Gold mines vs. Physical gold

Producer Index

GDM (NYSE
Arca

Gold
Miners

Index)

Explorer Index

MVGDXJ (
Mkt

Vector

Junior Gold
Miners

Index)

Source: Bloomberg

25

25

Gold mines vs. Physical gold



Gold

mining

companies

have

been

penalized

for

not

being

able

to

deliver

the

expected

historical

leverage

resulting

from

a

higher

gold

price
.



Despite

a

historical

high

profitability

(
19
%

of

net

margins

in

Q
1

2013
),

the

latter

have

stagnated

these

last

two

years

while

gold

price

increased

by

13
%

over

the

same

period
.



THE

REAL

QUESTION
:

will

gold

mines

regain

their

historical

leverage?




many

fundamental

elements

demonstrate

that

the

mining

industry

understood

the

message

sent

by

the

investment

community

and

several

managerial

strategic

decisions

made

in

the

last

few

months

validate

this

point


These

decisions

have

a

double

objective
:

rationalize

the

operations

and

reduce

the

dilution

that

plagued

the

industry
.


26

26

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
.

Very

recently,

Allied

Nevada

Gold

Corp
.

and

Newcrest

Mining

Ltd
.

made

similar

announcements
.



The

carnage

in

the

junior

space

(index

down

70
%

from

its

2011

high)

triggered

a

wave

of

strategic

investments

by

senior

and

intermediate

producers
:

this

is

the

case

of

Agnico

Eagle

Mines

Ltd
.

making

investments

in

Sulliden

Gold

Corp
.
,

Probe

Mines

Ltd*,

or

Atac
*

Resources

Ltd
.
*

and

Teck

Resources

Ltd
.

financing

True

Gold

Mining

Inc
*
.




The

focus

is

on

cost

controls
:

Barrick

Gold

Corp
.

reduced

its

overhead

costs

by

$
100

million

and

identified

$
500

million

of

further

reductions

to

expenditures
;

Osisko

Mining

Corp
.

announced

a

decrease

of

$
80

million

in

discretionary

spending
;

Yamana

Gold

Inc
.

targeted

a

costs

reduction

of

US
$
150

per

oz

in

2013
.

Iamgold

Corp
.

initiated

a

program

to

reduce

annual

spending

by

$
100

million
.

* 8% cumulative weight in the Global Gold and Precious fund

27

27

Gold mines vs. Physical gold



Heads
-
up

announcements

are

made

in

respect

to

potential

closures

of

marginal

operations

should

gold

prices

deteriorate

further
:

this

is

the

case

of

Hochschild

Mining

PLC
.


Gold

mines

initiated

share

buyback

programs
:

this

is

the

case

of

Alamos

Gold

Inc
.

(which

offered

to

purchase

for

cancellation

up

to

10
%

of

the

public

float

of

its

outstanding

common

shares)

or

Eldorado

Gold

Corp
.

(up

to

5
%

of

the

public

float)
.



The

impact

of

a

lower

gold

price

already

impacted

Q
1

2013

marginal

operations,

with

Elgin

Mining

Inc
.
,

Aurizon

Mines

Ltd
.
,

Lake

Shore

Gold

Corp
.
,

Jaguar

Mining

Inc
.

or

Gabriel

Resources

Ltd
.

releasing

losses

for

the

quarter
.




New

phenomena

in

the

precious

metal

industry,

the

involvement

of

activist

shareholders
:

this

is

the

case

of

the

Clinton

Group,

Inc
.

which

demanded

changes

to

the

strategy,

operations

and

management

at

Stillwater

Mining

Company,

mentioning

a

series

of

«

strategic

missteps

»

and

«

bad

acquisitions

»


28

Global Gold & Precious


The Fund objective is to provide investors with quality excess return in comparison to the
FTSE Gold Mines Index composite.


The Fund manager is responsible for the stock selection and focuses mainly on 'large cap'
stocks listed on the North
-
American, Australian and South African stocks exchanges and which
are engaged in the prospection, the extraction or the transformation of precious metals.


A. Corbani is managing the fund since Jan, 1 2009





NAV Global Gold &
Precious:
236.96
/
FTSE Gold Mines (EUR) value:
169.72

Excess
Return

vs FTSE Gold Mines since
Jan 1 2009

+
17.4%

Annualized Volatility

vs FTSE Gold Mines index since
Jan 1 2009

29.3 vs 30.0

As of
05/29/13

Key facts

29

Investment Process

Portfolio
Construction

Stock Selection

CORE Bucket

50


80
%

SATELLITE Bucket

15


50
%

ETF

0
-

10%

CORE





Stock selection within the FTSE Gold Mines
Index components
(or
other producing mining
companies within
the sector)

Selection criteria:

Profitable
undervalued companies

Stock weighting is different from the Index

SATELLITE





Stock selection within the 2000 listed companies
of the Gold and Precious Metal sector


Selection criteria:

Under
-
valued
producing companies
,
undervalued assets, companies
with high probabilities
of
above average discoveries
,…

To optimize the portfolio allocation between
"PRODUCERS" and "EXPLORATORS"

Sources of Value Creation

To identify and select high potential stocks in the Gold
& Precious Metal sector

Exposure to
“SENIOR PRODUCERS
"

Exposure to
“JUNIORS
"

Exposure to physical ETFs to benefit from upside and
downside trends

Pure Stock
-
Picking

20 years of industry experience for the portfolio manager

About one hundred one
-
to
-
ones per year with company management

30

30

Investment Process

CORE

Market Insights


Network


Sell Side Research


Conferences / Seminars

Fundamental analysis


Operations geography / Regulation


Characteristics of mines


Financial ratios

Management
Meeting



Over 100
visits/one on one
per year

2 000 companies

Stock picking

Global Gold and Precious

40
-
50 stocks

Eligible
universe


80 / 90
companies,
monitored
daily

31

31

Portfolio
Snapshots

Core


Satellite breakdown (% of AuM)

Index


Out of the Index breakdown (% of AuM)


Portfolio breakdowns
(as of 05/29/13)

0
10
20
30
40
50
60
70
80
90
100
SATELLITE
ETF
CORE
0
10
20
30
40
50
60
70
80
90
100
OUT OF INDEX
FTSE GOLD MINES
32

32

Portfolio
Snapshots

Breakdown by Major Sector (% of AuM)

Breakdown by Type of production (% of AuM)

Breakdown by geography (% of
AuM
)

Portfolio breakdowns
(
as of
05/29/13)

0
10
20
30
40
50
60
70
80
90
100
SILVER
BASE METALS
GOLD
PGM
0
10
20
30
40
50
60
70
80
90
100
OTHER
EXPLORATION
SILVER PRODUCER
DIVERSIFIED MINES
PLATINUM PRODUCER
GOLD INTERMEDIATE
GOLD SENIOR
TRACKER
0
10
20
30
40
50
60
70
80
90
100
AUSTRALIA
CHINA
RUSSIA
NORTH AMERICA
SOUTH AFRICA
ETF
33

0%
5%
10%
15%
20%
25%
30%
35%
40%
< 1 Bn
1 Bn
-
3 Bn
3 Bn
-
10 Bn
> 10 Bn
CORE+SATELLITE 98.98%
5.96
23.50
0.03
0.29
2.18
0.00
0
5
10
15
20
25
Average
Max
Min
Core Capitalization
Satellite Capitalization
Portfolio
Snapshots

Market Cap
(as of
05/29/13)

Median:

675 M
USD

34

80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
440
460
480
500
520
540
560
580
Global Gold & Precious (in EUR)
FTSE Gold Mines (in EUR)
Physical Gold (in EUR)
Performance

Evolution of the Fund NAV
(net, in EUR, as of
05/29/13)

Change of portfolio manager

35

Performance

Evolution of the Fund NAV since Jan,1
st

2009

(net, in EUR, as of
05/29/13)

80
100
120
140
160
180
200
220
240
Global Gold & Precious (in EUR)
FTSE Gold Mines (in EUR)
Gold EUR
36

25.2%
39.1%
-
13.1%
-
17.1%
-
37.7%
20.5%
15.7%
-
3.1%
-
0.5%
-
1.0%
-
50.0%
-
40.0%
-
30.0%
-
20.0%
-
10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
2009
2010
2011
2012
20.13
FTSE Gold Mines

Relative return
Performance

Manager’s Tenure Snapshot

(Yearly performance, net, in EUR)

Up Markets

Down Markets

Proven ability to capture excess
performance in Up Markets and to
lower specific risk in Down Markets

37

Annualized statistics
(net, in EUR, as of
05/29/13)

Performance

Fund
Index
Fund
Index
Fund
Index
Annualized performance
-1.01%
-5.41%
-20.22%
-20.43%
6.91%
4.18%
Annualized volatility
29.32%
29.99%
27.44%
27.05%
32.97%
31.65%
Tracking error
7.73%
(-)
7.70%
(-)
11.00%
(-)
Information ratio
0.57
(-)
0.03
(-)
0.25
(-)
Sharpe ratio
-0.03
-0.18
-0.74
-0.76
0.21
0.13
Annualized overperformance
Since 01/01/2009
3 years
Inception
4.11%
0.79%
2.58%
38

Fund Management


Alain

Corbani

-

Chief

Executive

Officer

Lead

portfolio

manager

of

Global

Gold

&

Precious

and

Global

Energy

&

Natural

Resources

EXPERIENCE


-

20 years in the Sell
-
Side business, notably within Dominion Securities then RBC Capital Markets, a leading Canadian
Investment bank

-

Founding partner of Green Oak

Alain developed strong knowledge and expertise in North
-

American equity investing and in the commodities sector.

BACKGROUND

-
MBA in ‘Management International’
-

George Washington University, Washington DC, USA
-

Bachelor of Science in ‘Management
International’
-

IPESUP Paris France


Nicolas

Paccioni


Co
-
Portfolio

manager

of

Global

Gold

&

Precious

and

Global

Energy

&

Natural

Resources

EXPERIENCE


-

5 years of experience in the financial industry

After working for Cortal Bourse as a security operator, Nicolas joins Commodities AM in 2007 as a financial analyst on
commodities. He is appointed portfolio manager of Global Gold & Precious in 2009.

BACKGROUND


-

Inseec

Paris

39

39

Fund Terms

Global Gold and Precious

ISIN code:

AMF Category:

Minimum recommended holding period:

Legal structure:

Distribution policy:

Base currency:

Inception date:

Initial NAV:

Currency risk hedging:

Performance Index:

Bloomberg ticker

:

Others sources:

Valuation frequency:

Sales charge:

Management fees:

Performance fees:

Custodian:

Fund Administrator:

Statutory Auditor:


FR0007047527

Global Equity

5 years

French "FCP"

Capitalisation

Euro

07/21/2000

100 EUR

Optional

FTSE Gold Mines Index (en euro)

GLGOLPR FP

Morningstar, Europerformance

Daily

4 % (max)

2 % (max)

15 % of the performance above the FTSE Gold Mines Index

RBC DEXIA INVESTOR SERVICES

SOCIETE GENERALE SECURITIES SERVICES

DELOITTE & Associés





Asset under management as of
05/29/13: 12.1 M EUR

40

Take Away


Global Gold & Precious



Positive

gold

sector

fundamentals

still

in

place

to

achieve

superior

return

despite

short

term

strategic

headwinds
.



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

fund

has

reached

its

optimum

exposure

to

the

junior

sector

with

a

49
%

allocation



Active

management

style

that

benefits

from

the

high
-
skilled

portfolio

manager

ability

to

select

stocks

within

the

production

and

exploration

sub
-
sectors



22

years

of

industry

experience

for

the

portfolio

manager



12
-
year

track
-
record,

with

first
-
class

French

industry

awards



+
2
,
58
%

of

outperformance

per

year

vs
.

FTSE

Gold

Mines

Index

(period
:

07
/
21
/
00



05
/
29
/
13
)

WITH

similar

volatility






41

Contacts

Nicolas

Paccioni

Co
-
Portfolio

manager

of

Global

Gold

&

Precious

and

Global

Energy

and

Natural

Resources

Portfolio

manager

of

Global

Euro

Middle

Cap


Tel
:

+
33

1

44

95

09

93

Email
:

npaccioni@commodities
-
am
.
com




Alain

Corbani

Chief

Executive

Officer,


Portfolio

manager

of

Global

Gold

&

Precious

and

Global

Energy

and

Natural

Resources


Tel
:

+
33

1

44

95

09

88

Email
:

acorbani@commodities
-
am
.
com



Commodities

Asset

Management

11

rue

de

Téhéran

75008

Paris

-

France

Facsimile
:

01

44

95

09

87

Internet
:

www
.
commodities
-
am
.
com



Mathilde

de

Cheffontaines

Head

of

Administration




Tel
:

+
33

1

44

95

09

86

Email
:

mdecheffontaines@commodities
-
am
.
com




42

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

www
.
commodities
-
am
.
com




Past

performance

is

not

necessarily

indicative

of

future

results
.