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  • 1. Short Introduction Precious Capital Global Mining & Metals Fund This introduction is for personal use only Precious Capital AG, Baerengasse 25, 8001 Zurich – www.preciouscap.com – info@preciouscap.com – Tel +41 (0)44 224 20 50 A flexible and dynamic mining fund managed by Precious Capital AG Bärengasse 25 - 8001 Zürich www.preciouscap.com
  • 2. Introduction Oil, c opper and other commodities have had a great run. But widespread interest in g old and s ilver has only lately arisen in the market, despite the fact that the price of g old has doubled over the last four years. Are we already near the end of the bull market? We say: It has only just beg u n! The increase in the US dollar gold price from $260 an ounce in 2001 was until recently almost entirely due to the devaluation of the US dollar on the foreign exchange markets. The Euro profited mostly from the mistrust of the US Dollar , but it too lost some support amongst investors following the “No” vote against the EU Constitution from the citizens of France and the Netherlands . That was the day that gold was reborn and be came respected again as an alternative investment. This emotional event changed the behaviour of investors concerning g old. But many investors still overlook the fundamental reasons as to why g old, s ilver and most base metals and minerals show rising valu e s. Due to this fact, mining stocks have by far underperformed the spot prices of the metals. Worldwide inventories of most metals are rapidly decreasing towards a very low level. Exploration almost dr ied up during the 90‘s a nd today we have low supply levels that cannot cover demand and which will last for many years. This is the case not only for g old and silver , but also for uranium, c opper and other base metals and minerals. Several other t rends and facts support the expectation of a continuing bull market in mining stocks over the years to come. This convinced us that the timing was right to launch the “ Precious Capital Global Mining & Metals Fund ” on February 10st, 2006. This Swiss domiciled Fund, flexible and dynamic in its structure, will invest its assets worldwide in exchange listed companies engaged in precious and base metals or minerals. The portfolio will mainly be invested in the larger producers but will also contain selected medium and small capitalisation stocks as opportunities arise. The fund will employ a long-only investment strategy , with no leverage but with the possibility to use covered derivatives and to hedge currency exposure. With a strategy allowing invest ments in fixed-income instruments in a bear market , the fund aims to realise an absolute return on capital in all market conditions. With this flyer , we would like to present a short overview of our company, some ideas about the market and some details o n the fund. It would be a great pleasure for us to introduce ourselves personally and give you a detailed presentation. Precious Capital AG, Baerengasse 25, 8001 Zurich – www.preciouscap.com – info@preciouscap.com – Tel +41 (0)44 224 20 50
  • 3. The Company The company was incorporated in September 2005 with a fully paid up c apital of CHF 650’000 by a group of experts and is located on Baerengasse 25, Zurich, in the same building as Pictet & Cie, Private Bankers and Brown Brothers Harriman. We are very proud to have a carefully selected international shareholders who support us in the financial, technical and legal aspects of mining investment. The objective of the company is to combine a large network of professionals to deliver unique investment products with in the mining sector. Chairman Andrew Michaels - CEO of Zuri-Invest AG, Zurich - 36 years of experience in A sset Management - 35 years of experience in mining investments - large network in international banking - assisted in the financ ing of many producing m ines in the US and Canada CEO Hans Peter Schmidlin - Swiss citizen, born in 1965 - Eidg.dipl. Vermögensverwalter AZEK - Financial Analyst EFFAS - Former H ead of T rading ABN Amro Bank, Zurich - Founder and editor TnP Research, Baar - 20 years of trading experience - 22 years of experience technical analysis - 6 years of experience financial behaviour - 9 years of experience as a g old a nalyst Member of the B oard Prof. Dr. Vito Roberto - Professor at the University of St. Gall - Attorney at law - Chairman of the law faculty Univ. of St. Gall - Consultant Baker & McKenzie, Zurich Director Patrick Michaels - Several years of experience in Asset Management and Corporate Finance - Attended courses at the postgraduate program of the University of Colorado, School of Mines
  • 4. The Company, part 2 The company has some 15 carefully selected international individual shareholders. Among st them are former CEO’s of Swiss banks, international banks and large asset management companies and individuals from various other sectors with different areas of expertise in resource investing or geology. The main focus of the company is fund management. In addition, Precious Capital AG advises institutional clients and private individuals on investing in natural resources . The company also owns and operates the website “Golddesk.ch” which enables it to maintain close contact with investors. Precious Capital AG has the capability to guide mining companies to accessing new financial markets and introduces them to financial institutions which invest in metals and mining. The facts on the metals Market observers believe the rising prices of precious and base metals have come about due to the fear of inflation or the rising demand from the F ar E ast. However, during the late 90 ‘ s there was not enough exploration which results today in a large imbalance between supply/demand that will last for several years to come: It takes a long time and is cost-intensive to reopen old mines and it can take up to 8 years until a new mine can go into production. Furthermore, the financ ing market for new exploration has only improved since 2001. The majority of investors still ignore these facts. Should demand increase for other reasons such as political or currency turbulences, the imbalance in the market will become even larger. Investors should take advantage of this. Low valuations of mining equities The overall market capitali s ation of gold and silver mining stocks worldwide amounts to only about USD 170 b illion. This is approximately the market capitalisation of companies such as Intel, Pfizer or Altria (ex Philip Morris). Commonly, in a bull market, mining stocks outperform the underlying metal by about three times. This has not happened so far. Investors are deeply concerned about the high oil price and the US Dollar devaluation . The higher price of metals will cover the rise in energy costs which are a major cost factor to every producing mine. Investors will become aware of this point maybe through improved earnings in the first quarter results of 2006. Therefore , mining stocks should not be underweighted in a portfolio.
  • 5. Bullish or bearish on a metal? 4. Technical and sentiment analysis 3. Fundamental analysis 2. Market Risk 1. Overall Risk (Region, currency) Asset assortment (which stock is a buy or sell) Stock selection Portfolio Construction approx. 20 to 50 stocks Constant review Precious Capital Global Mining & Metals Fund The investment process can be broken down into four steps: Risk Management
  • 6. Precious Capital AG, Baerengasse 25, 8001 Zurich – www.preciouscap.com – info@preciouscap.com – Tel +41 (0)44 224 20 50 Precious Capital Global Mining & Metals Fund Indication of A sset A llocation Our business partners for the fund are: Asset Manager Precious Capital AG, Zurich Fund Management LB (Swiss) Investment AG, Zurich Custodian Liechtensteinische Landesbank (Schweiz) AG, Zurich Auditor PriceWaterhouseCoopers, Zurich
  • 7. Precious Capital Global Mining & Metals Fund
    • In bearish markets:
    • Overweight in big caps with selling of covered calls
    • Selling calls to generate income or decrease positions
    • Investments in bonds, convertible bonds or bonds with options
    • Cash
    • In bullish markets:
    • Average weight in big caps
    • Overweight in mid and small caps
    • Underweight in certificates and ETFs
    • Selling puts to generate income or increase positions
    Indication of A sset A llocation
  • 8. Precious Capital AG, Baerengasse 25, 8001 Zurich – www.preciouscap.com – info@preciouscap.com – Tel +41 (0)44 224 20 50 E xpected characteristics of the fund: Volatility 15% to 20% NAV approx CHF 23 Mio. Soft closing CHF 300 Mio. Trading on a daily basis Target return in bull markets > 10% i n sideways markets 5 to 10% i n bear markets 0% to 5% F und fees: Issue fee up to 3% Administration fee up to 1.5% annually Incentive fee 20% of capital appreciation, with 5% hurdle and cumulative high water mark Trading: Daily through Liechtensteinische Landesbank AG, Vaduz Swiss security number 2333575 Precious Capital Global Mining & Metals Fund
  • 9. Should you be interested in a personal presentation on the Precious Capital Global Mining & Metals Fund , please contact us directly: Hans Peter Schmidlin, CEO or Patrick Michaels, Director Precious Capital AG Baerengasse 25, CH - 8001 Zurich www.preciouscap.com [email_address] Tel +41 (0)44 224 20 50 Precious Capital AG, Baerengasse 25, 8001 Zurich – www.preciouscap.com – info@preciouscap.com – Tel +41 (0)44 224 20 50