Technology Metals (TM)

ELECTIO

Contents

“The market for technology metals may double by the middle of the decade”.

2011 report by Ernst & Young LLP

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Electio TM products

The opportunity

Why invest in TMs?

Client security

Electio Regulatory Framework

Delivery Vs Payment (“DVP”)

Tangible asset / Commodity

What is a bonded warehouse?

Bank / Custodian

Regulated Administrator

Opening your account

Managing your account

Introduction

Offi cial Partner of the PGA of South Africa

About us

World’s fi rst TM trading platform

World’s fi rst with liquidity

World’s fi rst TM trading app

What are Technology Metals (TMs)?

What do we use TMs for? Almost Everything.

A global monopoly

Supply and Demand

In the News

Supply chain issues

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Introduction

“China, supplier of 95 percent of the 17 elements known as TMs, has clamped down on mining and cut export quotas, boosting prices and sparking concern among overseas users such as Japan about access to supplies. The government may further reduce export quotas, pushing prices higher” (Goldman Sachs, Australia)

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While investor confi dence is generally considered to be at an all time low by most analysts and the global economic outlook bleak, trading traditional asset classes can often be associated with far too much risk. Time and time again, investors look to alternative investments when market condi-tions are poor for traditional asset classes.

Historically, when stock markets crash, property markets usually suff er a similar crash. In these conditions, investors increasingly run to commodities as a safe haven.

Nothing demonstrates this better than oil and gold. Since 1997, the price of gold has rocketed from $150 to its current levels of $1700. Similarly, oil has risen from $40 to $110 in just fi ve years.

But has the ten-year gold rally come to an end? Many analysts say “yes”. The purchase of commodities continues to be seen as a safer option by many professional investors, relying as it does on the most basic of trading principles: supply and demand.

What if we could no longer build aeroplanes, satellites, wind turbines or mobile phones? What if a monopoly over an entire industry was in place and this monopoly could dra-matically aff ect the way we operate on a global scale?

The Technology Metals (TM) market is often described with many diff erent names and abbreviations, such as: Critical Materials; Critical Earth Elements; and; Rare Earth Ele-ments to name a few. At Electio we believe in keeping things straight forward and clear and for that reason you will see one name and abbreviation used consistently: Technol-ogy Metals (TMs).

TMs are often described as the most valued commodities on earth. They are used to build, create and manufacture almost everything we use and rely upon on a daily basis.

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At Electio we understand the patience and strategic thinking behind lining up the perfect golf shot . This is why we are delighted to announce that Electio has been selected as the Offi cial Alternative Investment Partner of the Profes-sional Golfers Association of South Africa (PGA).

In the same way that professional golfers always carry diff erent clubs in prep-aration for the shots they may have to take under any condition, a smart in-vestor will always have diverse assets in his portfolio so that he is prepared for any fi nancial climate.

OFFICIAL ALTERNATIVEINVESTMENT PARTNER

Official AlternativeInvestment Partner of the

PGA of South Africa

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About usElectio was founded by a group of like-minded high net worth investors as a niche investment platform enabling judicious investors to diversify their portfolios into the Alternative Investment Sector.

Aided by trade-on-the-move technology, Electio off ers a leading-edge trading space, backed by the necessary market knowledge and expertise to give investors what they want and give credence to it’s ambition to become a world-leading alternative in-vestment provider.

Fundamental to the Electio model is our use of technology in an online trading space in which investors’ have:

• the ability to monitor their investments on the move;• liquidity and an online platform facilitating 24/7 trading;• access to TM investments;• the means to diversify investments for an optimal portfolio and spread risk;• enhanced protection and safeguards for non-traditional asset classes.

World’s first TM trading platformAt Electio we view technology as one of the most important aspects of our business. Our dedication to fostering an aspirational brand has seen us develop the world’s fi rst TM trading platform. This creates a marketplace for Electio customers to buy and sell TMs simply and effi ciently within the same platform. *

This allows you to:• Buy and transfer TMs• View your trading account history • View the payment history for your account• Contact customer support • View today’s trading price at the touch of a button• Request additional access for a representative or advisor to view your account• Restrict additional users’ permission levels as you wish

*All trades are subject to liquidity in markets.

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World’s first with liquidity

Our global scale and reach allows us to connect buyers and sellers across all market jurisdictions. Our customers enjoy online access to their accounts and all the information they need to make an informed decision. This is why Electio is proud to be in the unique position of being the fi rst to off er liquidity. This fl exibility to buy and transfer TMs is an industry fi rst within the TM market*.

*Subject to trading volumes and liquidity

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World’s first TM trading appAt Electio we understand a third of all internet access is mobile, which is why we have devel-oped the world’s fi rst TM trading app.

The Electio TM trading app allows you to:

• Buy and transfer TMs • View your trading account history • View the payment history for your account• Contact customer support • View today’s trading price at the touch of a button• Request additional access for a representative or advisor to view your account• Restrict additional users permission levels as you wish

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What areTechnologyMetals (TM)s?As defi ned by The International Union of Pure and Applied Chemistry (IUPAC), Technology Metals are a set of 17 chemical elements in the periodic table, specifi cally the 15 lanthanides plus scandium and yt-trium.

TMs have extraordinary properties and are hence indispensable in the world of mod-ern technology. They help increase effi ciency, productivity and accuracy of components. They have been highlighted as “critical” by the US government. They are vital to eve-ryday life, scarce by their nature and very diffi cult to extract.

The extraction and, in particular, the pro-cessing of TMs is extremely capital inten-sive, ranging from $100 million to $1 bil-lion of capital expenditure depending on the location and production capacity.

The estimated fi nancial investment needed just to prove the resource (i.e exploration and drilling) can be up to $50 million.

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What do we use TMs for? Almost Everything.In the modern world we now use TMs on a daily basis without even re-alising it. They are now key in the technology industry and comprise the key components of everything from mobile phones or laptop computers to emulsion paints and medical implants. There is no doubt that some of the world’s industries depend heavily on them.

Many of these TMs are also essential in the production of green en-ergy alternatives such as wind turbines, electric cars and energy effi -cient light bulbs. As an industry set to expand exponentially over the coming decades, it is easy to see why a secure supply of these metals is of paramount importance

Also, with current population growth estimated to grow from 7.9bil-lion to 11.9billion by 2025, TMs are paramount to sustainable, safe growth and commercial evolution.

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Technology

• Computer chips• LCD screens• Disk drive manufacturing• Medical implants• Aircraft turbines• Mobile phone batteries• Laptop computer chips

Renewable Energy

• Electric car batteries• Solar cells• Wind turbines• Hybrid cars• Carbon capture storage pods• Geographical surveying equipment

National Security

• Nuclear technology• Satellites• Missiles• Radars• Lasers• Night vision• Communication systems

Other uses

• Dying of ceramic glass• Super alloys• Fuel catalytic convertors• X-ray fi lms• Fluorescent lighting• Fuel additives and catalysts• Doping agent for optical equipment• Paint

China eff ectively controls the current global supply of TMs, which is a well docu-mented and major concern for Western economies.

Currently China:• Supplies over 95% of global TMs• Is expected to consume most of the supply• Has reduced export quotas by an average of 12% per year since 2005

As an example, there is currently no known substitute for one of the 17 TMs known as yttrium. Without yttrium, you can’t make the refractory molds needed to make jet-engine turbine blades. If you can’t make jet-engine turbine blades, you don’t have jet engines or power turbines. The price points for TMs including the likes of yttrium are predicted by most fi nancial analysts to rise in the face of unalterable demand.

An act was recently tabled in the US to take all necessary initiatives to reintroduce a domestic technology metals supply chain so as to ensure a secure source of these vital metals. However, new mining set ups are prohibitively expensive and are likely to push the prices up further.

A global monopolyIn the UK, a Science and Technology Committee report warns: “The UK will need to secure supplies of TMs or future economic growth will be put at risk.”

The Royal Society of Chemistry, which contributed to the report, says: “emissions targets could be missed if the UK fails to formulate a plan for TMs.”

As demand for technology metals increased, fol-lowing the development of newer technologies re-quiring them, China began to steadily reduce the supply of these metals. In the second half of 2010 China suddenly announced they were cutting their export quota by 72 percent, and announced that they have only limited resources.

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Supply and Demand

Market share

Global demand and supply shifts are altering the dynamics within the TM market, presenting both challenges and opportunities. “Global demand is expected to reach 200,000 MT by 2015,” (US Congressional research report, 2012)

“To provide most of our power through renewables would take hundreds of times the amount of technology metals that we are mining today,” (Thomas Graedel, Clifton R. Musser professor of Industrial Ecology and professor of Geology and Geophysics at the Yale School of Forestry & En-vironmental Studies)

Other Technology Metals are essential for solar cells, cell phones, com-puter chips, medical imaging, jet engines, defence technology, and much more.

“Every megawatt of electricity needs 200 kilograms of neodymium—or 20 percent of one ton,” he said. “So if every big wind turbine produces one megawatt, fi ve turbines will require one ton of neodymium. If wind is go-ing to play a major part in replacing fossil fuels, we will need to increase our supply of neodymium,” (Peter Kelemen, Arthur D. Storke Memorial professor of Geochemistry at the Earth Institute’s Lamont-Doherty Earth Observatory)

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A recent MIT study projected that neodymium demand could grow by as much as 700 percent over the next 25 years; demand for dysprosium, also needed for wind turbines, could increase by 2,600 percent.

China currently supplies 97 percent of global Technology Metal demand, and 100 percent of heavy technology metals such as terbium and dysprosium, used in wind turbines.

In 2005, it began restricting exports to preserve resources and protect the environ-ment, causing prices to soar. Today, the US is 100 percent dependent on imports for TMs. However, from the mid-1960s through the 1980s, Molycorp’s Mountain Pass mine in California was the world’s main source of TMs.

As the US share of TM production declined, China used government support, research and development, training programmes, cheap labour and low prices to de-velop its supply chain, increasing its share of TM production from 27 percent in 1990 to 97 percent in 2011. In March 2012, the US, Japan and the European Union lodged a complaint with the World Trade Organization over China’s limits on technology metal exports.

The US, South Africa, Canada, Australia, Brazil, India, Russia, Malaysia, and Malawi also have deposits of TMs, and while the US Geological Survey expects global reserves and as yet undiscovered deposits of TMs will be able to meet future demand, new mines may take up to ten years to develop, and resources in remote areas will likely be much more diffi cult to extract.

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In the NewsDysprosium oxide, used in lasers, has jumped 338 per cent since January... Even prices for the most common technology metals, such as lanthanum, used in hybrid car batteries, have risen sharply (Investment Banking Times, December 2011)

These ores, called TMs, can be refi ned into 17 technology metals, most of which were of little interest until the past decade. In recent years, however, demand has surged because the metals and their compounds are used in almost every modern electronic device, from fl at-screen televisions to mobile phones, as well as hybrid cars, wind turbines and even defence missiles (Financial Mail on Sunday, April 2012)

TM shortages can threaten the growth of Western Europe, so the EU has now launched a campaign against the shortage (Spiegel online, February 2012)

Electric cars to be hit by supply disruptions…that’s the verdict of a new report from the US Department of Energy entitled ‘2011 Critical Materials Strategy’, which looks at supply challenges for fi ve technology metals…. – These met-als were found to be near critical (US Department of Energy 2011 Critical Materials Strategy)

Dysprosium, along with terbium, europium, neodymium and yttrium, have been reported as already reaching ‘critical’ levels of short-term supply (2011 Critical Materials Strategy US DoE)

There’s no substitute for yttrium. Without it, you can’t make the refractory moulds needed to make jet-engine turbine blades. If you can’t make jet-en-gine turbine blades, you don’t have jet engines or power turbines. The price points for these TMs will refl ect true scarcity and unalterable demand. Peo-ple will bite the bullet and pay what they have to in order to get the yttrium (Financial Times, November 2011)

Industrial buyers are in shock after witnessing the price of TMs, such as ce-rium oxide jumping 475 per cent in just fi ve months, amid falling supplies (Financial Times, November 2011)

TMs are the economic and technological foundation of a safe and secure na-tion. To possess them imparts independence, immunity to coercion, and the tools to invoke scientifi c advancement (James B. Hedrick, US government mineral resources advisor)

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Supply chain issuesThe supply chain for Technology Metals generally consists of min-ing, separation, refi ning, alloying, and manufacturing (devices and component parts). A major issue for TM development in the United States is the lack of refi ning, alloying, and fabricating capacity that could process any future TM production.

An April 2010 Government Accountability Offi ce report illustrates the lack of US presence in the TM global supply chain at each of the fi ve stages of mining, separation, refi ning oxides into metal, fabri-cation of alloys and the manufacturing of magnets and other com-ponents. According to the GAO report, China produces about 95% of the TM raw materials, about 97% of TM oxides, and is the only exporter of commercial quantities of TMs. As an example, special magnets that operate at the highest temperatures include small amounts of TMs, which are currently only available from China.

Around 90% of the TM alloys are produced in China (with some minor production in the US), thus, even if US TM production ramps up, much of the processing and metal fabrication would still occur in China.

*Please note the above brand names are used for illustrative purposes only.

Demand from companies around the world

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Electio TM productsBefore off ering TMs to our clients, Electio conducted over 12 months of market analysis both externally and internally through our large client database to determine how and when professional investors would wish to trade TMs.

We found clients considered diversifi cation to be at the top of their ‘wish list’ and the general consensus was clients would feel more vulnera-ble holding one type of TM. For this exact reason, Electio has designed trades to be executed in “baskets” to diversify risk across a number of diff erent metals.

Holding more than one type of TM aims to spread your risk across the market and is less focused on the individual performance of a specifi c metal. As you will see below, Electio has also structured its ‘baskets’ so they have specifi c sector or industry focus. This allows clients to not only diversify the types of TM but also diversify the sectors and industries those TMs are used in.

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Smartphone basket

• Europium Oxide• Terbium Oxide• Dysprosium Oxide• Erbium Oxide

Technology Basket

• Erbium Oxide• Dysprosium Oxide• Praesodynium Oxide• Ytterbium Oxide

Green Energies Basket

• Erbium Oxide• Lanthanum Oxide• Neodymium Oxide• Yttrium Oxide

Defence Basket

• Ytterbium Oxide• Neodymium Oxide• Cerium Oxide• Gadolinium Oxide

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The opportunity

Electio has created a ‘full service solution’ for private clients to:

• Buy TMs• Hold TMs, and• Sell TMs

The below are some of the key attributes to purchasing TMs through Electio:

• 2-5 year recommended ‘hold’ period• 3 years bonded warehouse storage• Insured at full market value• Simple buying process• Security of a regulated administrator• Security of a regulated custodian (i.e a bank)• Simple exit option through Electio platform*1• Take physical ownership of your asset if desired*2• Global demand predicted to increase by 8-12% pa until 2015 (Houses of Parliament department of Science and Technology research note, June 2011)• China controls 97% of world exports - export quotas will fall to 65% by 2014 (Chinese Government Export Quota, May 2011)

*1: Subject to market conditions and liquidity.*2: Client would be responsible for any taxes due dependant on delivery jurisdiction.

Why invest in TMs?The simple answer: supply and demand. Experts agree global de-mand for TMs is set to soar in the next 5-10 years and worldwide, exponential sales growth is forecast for consumer electronics and electronic vehicles - all of which rely on TMs for production.

Demand for TMs is further enhanced by the looming deadlines many nations have agreed to lower their carbon emissions by, as they move to greener sources of energy production, such as wind and solar - technologies heavily reliant on TMs.

These governmental pledges were further endorsed by a swathe of new commitments made recently at a United Nations Conference on Sustainable Development in Brazil (rio+20). In January 2012, the US Energy Department warned limited supplies of the fi ve TMs used in green technologies would pose a threat to production by 2015.

David Sandalow, assistant secretary for policy and international af-fairs at the Department, said: “Demand for technology metals has grown more rapidly than that for commodity metals such as steel.”

A unique phenomenon is occurring in the TM industry that experts have described as the ‘perfect storm’ for business. While TM de-mand increases, uncertainty about the industry’s ability to keep up with supply continues to make headlines. China currently controls over 95 percent of the world’s supply of TMs but has been restricting export quotas.

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In July 2010 China reduced these quotas by 40 percent. In March, the US, EU and Japan asked the World Trade Organization for a review of China’s policies, accusing it of attempting to give its own high-tech industries a competitive edge over the rest of the world.

Although China only has about 40 percent of global estimated TM deposits - and there are several projects worldwide underway to extract the ore - it seems unlikely production will be able to satisfy current demands any time soon. In fact, China itself could become a net importer of TMs by 2014, according to Mark Smith, CEO of Colorado-based TMs mining company Molycorp. Recent reports in the media suggested China has begun buying and stockpiling TMs, taking advantage of current low prices.

Experts believe TM shortages are likely in the coming years, The Daily Telegraph recently reported. It also quoted Pricewaterhouse-Coopers as likening the TM supply situation to a ‘ticking timebomb’. In a recent Technology Metals report, TM expert, Jack Lifton, said “The critical TMs will maintain strong demand and associated pricing. Certain TMs have off ered staggering returns ... over the past four years”

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Client security

At Electio we believe we have developed the safest and most secure trading and holding structure for TMs globally. We are proud of the structure we have developed including:

• Electio Regulatory Framework• Delivery vs Payment (DVP)• Tangible asset / commodity• Electio Platform• Regulated administrator• Bank / Custodian• Bonded warehouse• Insurance

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Electio Regulatory Framework

Electio has incorporated many operational and man-agement practices and principles akin to those found in regulated markets in an eff ort to, among other things,

• Distinguish itself from other market participants by establishing itself as a more professional, secure and vi-able business • Provide greater confi dence and security to its clients and other stakeholders • Position itself for its long term expansion and growth initiatives and aspirations

Delivery versus payment or DVP is a common form of set-tlement for securities and commodities. The process in-volves the simultaneous delivery of all documents neces-sary to give eff ect to a transfer of securities in exchange for the receipt of the stipulated payment amount. Ideally, title to an asset and payment are exchanged simultane-ously.

Electio has the resources and scale to off er clients the ability to receive delivery / title of their purchased TMs in exchange for payment. This means there is no ‘order period’ or ‘waiting period’.*

*Subject to banking hours, warehouse hours and Electio’s Terms & Conditions.

Delivery Vs Payment (“DVP”)

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Tangible asset / Commodity

While investor confi dence remains low, Electio believes you should physically own what you are paying for. TMs are a physical, tangible asset / commodity that can be physically delivered to a warehouse of the clients choosing if required.

What is a bonded warehouse?Given the physical nature of TMs, Electio stores clients’ purchased TMs in secured bonded warehouse in reputable jurisdictions. A bonded warehouse is a building or other secured area in which du-tiable goods may be stored and managed or undergo manufacturing operations without payment of duty. It may be managed by the state or by private enterprise. In the latter case, a customs bond must be posted with the government. This system exists in all developed countries of the world.

Below are some of the key attributes of a bonded warehouse:• Delivery to and storage at load port• Ocean transportation if required• Discharge and storage at the destination port• Customs formalities• Delivery to fi nal destination if required• High security • Title certifi cations

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Bank / CustodianBermuda Commercial Bank (BCB) - a fully licensed and regulated bank - provides global custody services to funds, trusts, corporate entities and individuals through its international correspondent network. BCB operates in 85 countries and can hold equities, debt instruments, commercial paper, commodities and metals, for or on be-half of its clients.

Below are some key facts about BCB:

• Established by an act of Parliament in 1969• Licensed and regulated by the Bermuda Monetary Au-thority • Previously part owned by Barclays Bank • Listed on Bermuda Stock Exchange • One of only four licensed banks in Bermuda• BCB is a member of the SWIFT (Society of Worldwide Interbank Financial Telecommunication) network The TMs of Electio’s clients are under the custody of BCB. This world-fi rst arrangement for custody of TMs off ers en-hanced service and security with investor peace-of-mind as the fundamental cornerstone of our client relationships.

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Regulated AdministratorBeacon Fund Services (Beacon) provides comprehensive and sophisticated management, consulting, administration, accounting and other related services to a wide range of off shore and domestic hedge funds, and other international entities with over $10BN of assets under administra-tion.

Below are some key facts on Beacon:

• Beacon is licensed and regulated by the Bermuda Monetary Authority (BMA) under the Investment Funds Act 2006• Established in 1995• Over $10 billion USD of assets under administration

The TMs of Electio’s clients are under the custody of Bermuda Commercial Bank (BCB). The appointed authorized agent of BCB is Beacon Fund Services, a regulated administrator, responsible for the management and administration of BCB’s custody arrangements related to TMs of Electio’s clients which includes confi rmation of bar-codes, storage, insurance and custody in respect thereof.

This is another world fi rst and another important part of the service and security Electio prides itself on.

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Opening your account

We set-up an Electio account in your name and assign you a Electio account number.

Your platform access is granted once we have emailed you your login details for iPhone app, iPad and computer.

The trade price is locked down before payment is made.

We send you confi rmation of payment and trade direction by way of the Trade Notifi cation.

Complete application form and provide 2 forms of identifi cation.

We email you the Contract Note which confi rms the quantity and price of TMs purchased.

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Managing your account

We allocate you a broker to keep you updated as often as you request.

We will invite you to corporate days at major sporting and sponsored events.

We send you monthly TM news.

We will send you important announcements via Electio’s online platform and iPhone app.

The Electio Client Liaison Team is just a phone call or email away and ready to answer your queries.

You will receive general Electio electronic newsletter feed.

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balance your decisionThis document is for professional investors and advisors only and not intended for distribution to the general public. There is no guarantee of performance and/or price and past or projected performance and/or price is not necessarily indicative of future performance and/or price.

This document does not constitute a prospectus, offer, invitation or solicitation for the sale of technology metals (TMs) nor should it be construed to constitute any investment advice. It is not intended to provide the sole basis for any evaluation of TMs or any other instrument or product which may be discussed in it. Purchase of TMs can only be made by completing the order form of Electio and/or its affiliates and/or its agents and agreeing to Electio’s terms and conditions referenced therein. A copy of the Electio terms and conditions may be obtained from Electio and/or from Electio’s website (www.electio-invest.com) at no charge.

An investment in TMs involves a degree of risk. Prospective investors should consider carefully the risk factors described in the Electio terms and conditions and their own circumstances, before deciding to invest in TMs. In making an investment decision, investors must rely on their own examination of the TMs and Electio’s terms and conditions, including the merits and risks involved. No assurance can be given that the performance and/or price of TMs will be maintained or increase.

This document may not be used for the purpose of an offer or solicitation for the sale of TMs by any person in any jurisdiction (i) in which such offer or solicitation is not authorized, or (ii) in which the person making such offer or solicitation is not qualified to do so, or (iii) to any person to whom it is unlawful to make such offer or solicitation.

Investors interested in acquiring TMs should inform themselves as to: (i) the legal requirements within the country of their nationality, residence, ordinary residence or domicile for such acquisition; (ii) any foreign exchange restrictions or exchange control requirements which they might encounter on acquisition or disposal of the TMs; and (iii) the income tax and other taxation consequences which might be relevant to the acquisition, holding or disposal of the TMs.

Johannesburg

Unit 20, 1 Melrose Boulevard

Melrose Arch, Johannesburg

South Africa 2193

Telephone: +27 (0) 11 684 1747email: info@electio-invest.com

Dubai

Office #1702, One by Omniyat

One Business Bay, First Al Khail Street

Dubai, UAE

Telephone: +971 4447 0990email: info@electio-invest.com

Qatar

Level 22, Tornada Tower

Al Funduq Street, West Bay

Doha, Qatar

Telephone: +974 4429 2554email: info@electio-invest.com

ELECTIOELECTIO