Event:ChinasCommodityDemandandtheeffectsofRMBInternationalisation Speaker:JingUlrich,MD&Chairman,GlobalMarkets,China In2011,netexportswasadetractorofGDPgrowth Increasingly,thecentralgovernmentismovingtowardsbalancingconsumption andfixedassetinvestmentwithintheChineseeconomy o Fixedassetinvestmentstakeup50%ofChinasGDP o Withinthefixedinvestmentscategory,manufacturingtakesup34%, RealEstatetakesup28%,Transporttakesup9% o Essentially,RealEstatecontributescloseto10%ofChinasGDP SpecificallyintheShanghaiandBeijingrealestatemarket,thereisabout10to 12monthofinventory Thereisa6monthlagbetweenupstreamconstructionanddownstream propertysales.Goingintoupstreamcompaniessuchascementandsteelmay beabadideanowbecauseofanticipatedweaktoplinegrowth.

owth.Nevertheless, upstreamcompaniesarestillbetterbuysthanmidstreamcompaniesbecause thelatterisstillhighlyfragmented CoaldemandgrowthinChinaremainsstrongbutdistributionisunevenand largelyconfinedwithinthecoastalregions.SupplywithinChinaislikelyto remaintight Asregardtransportinfrastructure,itisimportanttodeterminewhetheritis fundedbythelocalgovernmentorthecentralgovernment o Localfundedprojectstendtoslowdownbecauselocalgovernments tendtorelyonlandsalesforfinancing.LandsalesinChinahasslowed down Thereisstillstrongyoyquarterlydemandgrowthforbasemetalssuchas copper(+46.2%),aluminium.Ironoreisslowingdown Governmentislikelytospendalotonelectricityinfrastructureupgradesfor grids,powerlinesetc ItismoreimportanttolookatloangrowthratherthaninterestratesinChina. Withtheexceptionofaperiodin2009,loangrowthinChinahasgenerally trackedGDPgrowth.Thebankingsystemissupplyconstrainedratherthan demandconstrainedbecauseoftheCentralGovernmentsworriesabout inflation IntheChinesebankingsystem,reserverequirementratiotripledsince2005 o ThereisaboutUSD2.5TorCNY17T40%ofannualGDP

o Loantodepositratioof63%tendtobelowerthanwesternbank averages o LiquidityisgenerallynotanissuewithinChinesebanks.RMBdeposit isaboutCNY81Tandthismakesupabout109%ofGDP.Chinese banksdifferfromwesternbanksbecausethereisalmostnorelianceon wholesalefunding Event:PaneldiscussionAllocatingtoagricultureinyourPortfolioforthebestreturns andexposure Theplayonbasiccommoditiesisbasicallycentredongeopoliticalrisk, environmentalrisk(e.g.naturaldisasters) o Theresalotofdemographicpressuresandenvironmentalpressureson thepriceofbasiccommodities o Insurancepremiumsonextremeweatherhasclimbedbymorethan5x inthelast5years Manybasiccommoditiesthatarestaplesareprecariousintheirsupplies o E.g.InChina,pork(whichisastaple),hasonlyanaveragenational inventoryof2days.Anationaldisasteronaregionthatrearspigcould meanmassiveporkoutages Since2005,cornforenergysupplieshasclimbed780%followingGeorge BushscommentonAmericabeingenergyselfsufficient.However,the availabilityofcornforfoodwentdowndespitethe8xincreaseinoverallcorn supply Inthecaseofsoybeans,yielddifferencebetweenUS&Chinais5:1 Theinflationoffoodpricesisoftenatriggerforpoliticalinstability.Itis importanttodiversifyexposureacrossvariousbasicfoodcommoditiesto hedgeoutthispoliticalrisk Interestingly,thereislittletonocorrelationbetweenbasiccommoditiesand endproductprices.Butwhenendproductpricesgoup,ittendstobeupwards sticky

Event:Mongolia(ProphecyCoalCorp) Createdin2009.Raised40mfromLondoninvestorsin2010 600MWdeficitinpowerinMongolia 1.4bntonnesofcoalin2properties SupplypowertoneighbouringChinaandRussia

Verylowvaluationbecauseofsmallsizeandthismakesitverydifficultforit toraise750m

Event:MongoliaPanelDiscussion:EvolutionfromFrontierMarkettoMainstream Investment Speakers: o PeterAkerley(ErdeneResourcesDevelopment) o JohnLee(ProphecyCoal) o JamulJadamba(MongulVenturesCorp,Private) MogulVenturelookingtogopublicinthesummeronTSX;onlyatfeasibility stage.LookingforAsianinvestorsbutAsianinvestorslackriskappetiteatthe explorationstage

Event:RaisingProjectFinanceforAfricanMiningProjects CommodityaccountedforonethirdoftheAfricancontinentGDP CriticalRisksinAfrica o DevelopmentRisk(Lackofinfrastructure,accesstoskilledresources) TheCAPEXforinfrastructuremaybemorethantheCAPEX ofthemineitself

o CountryRisk(political,regulatoryetc) o Social&environmentalimpactorlicensetooperate Limitednumberofcommercialbankswithminingfinancialexpertiseisan issue Involvementofexportcreditagencies(ECAs)suchasJBIC,NEXI,China Exim,Sinosure o Offersfinancialpackageinexchangeofequity/offtake/construction contracts KeysuccessfactorsforMines: o Strongtechnicalandcostcompetitivenessfundamentals o Minemusthavedemonstratedalignmentofinteresttohostcountry o Sufficientcapitalbuffers Event:ExploringAfricasVastMiningMarketGrowthPotentialHowChinese InvestorscanContinuetoBenefit Speaker:TengLiliang,ChinaAfricaDevelopmentFund

Fundsize:USD5bn.LargestinvestmentfundfromChinafocusingonAfrica Privateequityoperatingmodel.Purelycommercialbasedwithnopolitical affiliation Investmentareas: o Resourcesector(Oil&Gas,Minerals) o Agriculture o Industrialparks o Infrastructureandbasicindustries

Investmentcriteria: o JVwithotherChinesepartners.Lowriskappetite,longterm,stable return o Investmentsize$550mil o 58yrs o Equitycommitmentoflessthan50%(15%40%)

Involvement: o 40projects,USD1.1bn o IntendtouseleveragetoinvesteventuallyaboutUSD8mil o Intendtoexploreanother100projects o PartneringtopSOEs,privatesectors o Partnershipswithmorethan30Africangovernments

CADtypicallypartnerswithatleast1ChineseStrategicInvestor,1African PartnerinaJVproject.Chinesebanksextenddebtfinancingtotheprojectas well CADisaChinaGovernmentAgency.Strongcommunistpartyaffiliation o EnjoysbackingbyChinaDevelopmentBank

InvolvedwiththepowerplantinGhana,portprojectinNigeria,leather processinginEthiopia,EgyptSuezEconomicandTradePark Mininginvestments: o IronOre:Liberiawestcoast,GuineaSimandou o Preciousmetals:RSAWesizewePlatinum,GoldoneGold

o Basemetals:Various(copper,chrome,manganese,aluminiumetc) o Others:Uranium,coal,oil&gas Event:InvestingintheAfricanMiningSectortoDriveInfrastructureGrowth Governmentpensionfundtalk GEPFisAfricaslargestpensionfund,aboutSGD170bnandisadefined benefitscheme Governmentisthemainsponsor StrongSouthAfricabiasbecauseitcontributesonethirdofAfricasGDP GetsexposuretoresourcesthroughequitiessuchasBHP,Arceloretc Politicalstability&economicfreedomisanissue.E.g. o MiningactivityinZimbabwehasdeclinebecauseofgovernment policy o DebateofnationalisationofminesinSouthAfricaandthiscreates uncertaintytoCAPEXintheminingsector o Hugeinfrastructureproblems.CEOofAnglocommentedthattheywill notcommittofurtherCAPEXunlessthereisstableelectricitysupply RelyingonEconomicgrowthandurbanisationinChinaandIndiatodrive economicdemand o Alsorelyingonthemtodriveinfrastructuregrowth Hinterlandofpreciousandbasemetals Aimingforgreaterenergy,transportationandtelecommunication infrastructuredevelopment Estimation: o Power:7000MWofgenerationcapacityeachyear o Extensivetransmissionnetwork o CAPEXneeds:USD40.6bn o Existingspending:USD11.6bn o Yearlyfinancinggap:USD26.3bn Potentialforaviationindustry.Littledevelopmentofairportsandhardlyany airtrafficatthemoment

Event:UnlockingAfricasmineralwealth:overcomingregulatoryconcernsto maximizepotentialforminingprojects Speaker:RebeccafromHerbertSmith,Lawyer Eachofthedifferent50countrieshasitsownregulations Commonissues: o Defectsintitle:norightpapersthatisapprovedandsignedbytheright people o Somethingwrongwiththeoriginalgrant ForceMajeureeventsuchaswarsandunrestcouldresultininvestorslosses Donotunderestimatepoliticalinfluenceofstakeholders

Event:AfricancompanyspotlightUniversalCoalPlc 5projectinSouthAfrica o Cokingcoal(1.64bntonnes,25,000haundervariousprospecting license) o ThermalCoal(294mtonnes;1miningrightand5applicationsat variousstages.1neardevelopmentalproject,2atvariousstagesof feasibility) o 3projectsinEasternpartsofSouthAfricawithgoodelectricalpower infrastructuresupport,railinfrastructuresupport.Nearestporthas91m tonnesofexportcapacity ExportdemandmainlyfromChina,India&Korea.Augmentedbystrong domesticdemand