How to pick junior gold equities discusses factors to consider when selecting junior gold mining stocks. It notes that gold is in a long-term bull market but gold mining stocks have underperformed. Operational gearing means that as gold prices rise, profits of mining companies rise faster due to fixed costs. The document recommends focusing on high quality companies with consistent long track records, lower costs, proximity to infrastructure, and management experience. Exploration risks should be avoided in favor of companies with large, low-cost resources that can increase production over many years.

1. How to pick junior gold equities AngelosDamaskos – Sector Investment Managers

2. @Objectivelive GLOBAL RESOURCESINVESTMENT CONFERENCE 2011 Lead sponsor: Media partners: Other sponsors & participating organisations:

3. Sector Investment Managers Ltd JUNIOR GOLD fund PICKING Gold SHARES 27 SEPTEMber 2011

4. important notices Risk Warning: This material is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. The fund invests in smaller companies some of which are listed on the Alternative Investment Market which may carry a higher degree of risk. The shares of smaller companies may be less liquid and more volatile over shorter term periods. Changes in exchange rates between currencies may cause the value of investments to diminish or increase. The value of your investment can go down as well as up. Opinion expressed whether in general or both on the performance of individual securities and in a wider economic context represents the views of Sector Investment Managers Ltd at the time of preparation based on SIM’s internal analysis which may have not been verified by independent sources. They are subject to change and should not be interpreted as investment advice. Before making an investment in the fund, it is important that you read the Simplified Prospectus which is available free by visiting the websites above.Sector Investment Managers Ltd and Marlborough Fund Managers Ltd are authorised and regulated by the Financial Services Authority Issued by Sector Investment Managers Ltd. Marlborough Fund Managers Ltd tel: 0808 145 2501 Junior Mining is eligible for SIPPs and ISAs For further info and documentation visit: www.juniorgold.co.uk

5. Junior GOLDoeic focusing primarily in gold mining Diversified portfolio of smaller gold mining shares High conviction strategy focusing in a maximum of 40 holdings Daily traded FSA-authorised OEIC offering an effective allocation tool Net Asset Value of £40 million as at 23.9.11

7. Current situation Fiscal and economic worries have reduced investors’ risk appetite Early stage projects and exploration risk are discounted heavily Mature producers benefit from high spot prices commanding premium Focus on high quality companies with consistent and long track record Resources, resources, location, location Avoid narrow-vein deposits Seek lower operating costs Avoid political risk Proximity to existing infrastructure Ease of permitting All above factors are important in a volatile market

8. SHARE price drivers Smaller companies tend to outperform their larger peers in the long run Growth in production and organic cashflow is important Good Management costs, bad one costs even more Sector and regional experience Proven operating capacity Multiple mining concepts and approaches Active exploration programme

9. Avoid pure exploration risk Large resources that can be acquired at a reasonable price No serious environmental problems Experienced, proven management team Little or no debt and no hedging Strong cash flow on a PCF multiple below the average of peer group Increasing production with reasonably long life Low cost per ounce produced Prospective resource – open at depth and along strike HOW DO WE INVEST IN smaller GOLD SHARES?