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Investment Manager Presentation July 11Evy Hambro, Joint Chief Investment Officer
Catherine Raw, Portfolio Manager
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Disclaimer
1. Issued by Global Mining Investments Limited, ABN 31 107 772 467, (GMI) in conjunction with BlackRock Investment Management (UK) Limited(BlackRock), authorised and regulated by the Financial Services Authority. Registered office: 33 King William Street, London, EC4R 9AS. Tel: 020
7743 3000. Registered in England No. 2020394.2. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not
guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value ofinvestments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment mayfall suddenly and substantially. Levels and basis of taxation may change from time to time.
3. GMI has made every effort to ensure the accuracy and currency of the information contained in this document. However, no warranty is made as to theaccuracy or reliability of the information. The presentation does not take into account a reader's investment objectives, particular needs or financialsituation. It is general information only and should not be considered as investment advice and should not be relied on as an investmentrecommendation. Before acting on any information, you should consider the appropriateness of it and the relevant product havi ng regard to yourinvestment objectives, particular needs and financial situation . In particular, you should seek independent financial advice and read offer documentprior to acquiring a financial product. To the maximum extent permitted by law, none of GMI and its directors, employees or agents accepts any liabilityfor any loss arising from the use of this document or its contents.
4. Any research in this document has been procured and may have been acted on by GMI and BlackRock for their own purpose. The results of such
research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change.They do not necessarily reflect the views of GMI or any company in the BlackRock Group or any part thereof and no assurances are made as to theiraccuracy.
5. GMI may invest in emerging markets which are typically those of poorer or less developed countries. The prospects for economic growth in a numberof these markets are considerable and equity returns have the potential to exceed those in mature markets as growth is achieved. However, there arerisks to the Company from political, economic and market factors in emerging markets which are of particular significance. These include the possibilityof various forms of punitive or confiscatory government intervention, reduced levels of regulation, higher brokerage and tran saction commissions, lessreliable settlement and custody practices, loss of registration of securities, lower market liquidity, higher market volatility (causing substantial increase inprice and currency risks) and less reliable financial reporting.
6. GMI does not hold physical gold or other metals. Investors should be aware of the above-average volatility inherent in mining shares and the lowcorrelation between this sector and equity markets as a whole. Shares in smaller companies can be more volatile and less liqu id than those of largercompanies. When a portfolio of high yielding bonds is held, there is an increased risk of capital erosion through default or if the redemption yield isbelow the income yield. Economic conditions and interest rate levels may impact significantly the values of high yield bonds. Where a Company has a
particularly concentrated portfolio and a particular investment declines or is otherwise adversely affected, it may have a mo re pronounced effect than ifthe Company held a larger number of investments.
7. Subject to the express requirements of any client-specific investment management agreement or provisions relating to the management of a fund, wewill not provide notice of any changes to our personnel, structure, policies, process, objectives or, without limitation, any other matter contained in thisdocument.
8. Unless otherwise specified, all information contained in this document is current as at 31 May 2011.
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Why Gain Exposure to GlobalResources?
We believe that the global resources sector is the place to be, for at least the nextdecade and should be included in a diversified portfolio as a sector specificinvestment.
Supply-demand fundamentals support this proposition and should not be confusedwith short run speculative volatility in commodity pricing.
Investing in global resources is a specialised activity requiring detailed industry andmarket knowledge.
Resource portfolio construction should represent diversity across markets,commodities and companies.
GMI as an ASX listed stock provides this diversity through a single market entry
point, combining solid exposure to BHP & Rio plus a further 76 stocks listed across
10 stock exchanges including most of the major global resources companies.
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Evolution of World GDP
*Purchasing power paritySources: Angus Maddison, University of Groningen; The Economist for years 1-1970; IMF World Economic Outlook for 2008-2010
A History of World GDP
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Dj vu have we been here before?
1. Concerns over Chinese economy slowing
2. Japanese earthquake
3. Sovereign debt issues re-surface
4. Market fears over US economy as QE3 appears less
likely
Familiar seasonal pattern so far year to date
Similar macro concerns relating to:
Chinese monetary tightening
US economic growth
European sovereign debt issues
Performance of mining sector in 2010 versus 2011 year-to-date
Source: DataStream to 1st July 2011 HSBC Global Mining Index used as representative of mining sector
Performance of mining sector versus general equities year-to-date
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Demand-side dynamics
2009 regional breakdown of global commodity demand Copper Demand
Chinese and Indian Thermal Coal Imports Sea-borne Iron Ore Demand
Source: Deutsche Bank, March 2011. *Forecast data
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Supply-side dynamics
Supply constrained by:
Average mined grades falling
Infrastructure challenges
Discovery rates falling
Shortage of skilled labour
Long lead times on equipment
Geopolitical challenges
Challenges to forecast bulk commodity production:
Growth constrained by congestion on roads, rail and at ports
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Short term events driving spot prices higher
Markets are tight across a number of key commodities
Short term disruptions such as flooding and snow havemagnified impact on prices
So far in 2011 this has impacted
coking coal
iron ore
thermal coal (to a lesser extent)
Flooding in Queensland impacting coking coal operations
Snow impacting supply routes in Canada
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Supply-side dynamics: Resource
nationalism
Wave of resource nationalism as governments look to mining companies as source of revenues
Peruvian elections Humala victory
Humala proposing to double mining royalty, introduce windfall tax and increase corporate tax
Greatest impact on outlook for copper
country represents ~7% of global copper production but ~20% of production growth from 2011 to 2020
Also significant for gold: ~8% of global production; and zinc: >5% of production
New projects are at risk while companies wait for clarity on investment environment in Peru
Other countries also exhibiting nationalistic predilections include:
Australia: mineral resources rent tax and potential carbon tax
Canada: BHP Billiton bid for Potash Corp blocked by government on strategic grounds
Chile: increase in mining royalty to pay for earthquake rebuild
DRC: mineral license review and expropriation of producing mines
Guinea: renegotiation of mining license agreements
South Africa: talk of nationalisation of the mining industry by elements within the ruling party
Zimbabwe: requirement for 51% indigenisation of all foreign-owned operations
Longer term impact:
Slows down the rate of investment and therefore growth in supply
Mining companies require higher returns to compensate for higher degree of uncertainty
Net effect is higher commodity prices
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1
Coal prices
BHP Billiton have departed from annual benchmark for coking coal moving to quarterly in 2010. Nowoffering monthly pricing
High quality seaborne product sufficiently differentiated from low quality Chinese supply
Early settlement of thermal coal contracts shows potential of bulk producers to exert pricing power
Source: Macquarie data as at 24 June
2011
Coking Coal Pricing Thermal Coal Pricing
Source: Macquarie data as at 1 July
2011
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1
Iron ore
Iron ore markets changing significantly with move to quarterly pricing
This appears to be a permanent change though the exact mechanism for pricing is still evolving
Provides greater level of pricing transparency
Directly references spot price driven by high cost Chinese and Indian production
Marginal costs of production for iron ore have increased by over $20 to $149/t
Source: CLSA data as at 27 May 2011 Source: Macquarie/The Steel Index as at end March 2011
Iron ore pricing Supply curve to Chinese market for iron ore fines
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Challenges facing the copper market
The copper market is challenged by the following factors:
Declining open pit production
Average grade declines across the industry
Declining production capacity in low risk regions
With a forecast deficit of 500kt in 2011, there is a high risk of supply side shocks in the short term
In the long term these will clearly impact the ability of the copper market to significantly increase supply to meetthe forecast growth in demand
Open-pit production
74%
60%
2009 2025E
Challenges to forecast copper production:Increasing depth, decreasing grade and higher risk
Average grade
1.17%
1.03%
2009 2025E
Production capacity in
low risk re gions
88%
80%
2009 2025E
Source: Rio Tinto, October 2009, based on Brook Hunt
data
Copper Mine Disruptions by Type: 2004 - 2010
Source: Brook Hunt, February 2011
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1
Base metal prices and criticalinventory levelsCopper Zinc
Aluminium Nickel
Source: CRU International; LME; GS&PA Research, as at 2Q 2011
0
5
10
15
20
Mar-90
Mar-92
Mar-94
Mar-96
Mar-98
Mar-00
Mar-02
Mar-04
Mar-06
Mar-08
Mar-10
W
eeksofWestern
Consumption
0
50
100
150
Usc/lb
Critica l Stocks (LHS) Transit ion Stocks (LHS)
Excess Stocks (LHS) Aluminium Price (RHS)
0
5
10
Mar-90
Mar-92
Mar-94
Mar-96
Mar-98
Mar-00
Mar-02
Mar-04
Mar-06
Mar-08
Mar-10
WeeksofWestern
Consumption
0
100
200
300
400
Usc/lb
Crit ical Stocks (LHS) Transit ion Stocks (LHS)
Excess Stock s (LHS) Copper P ric e (RHS)
0
5
10
15
20
Mar-90
Mar-92
Mar-94
Mar-96
Mar-98
Mar-00
Mar-02
Mar-04
Mar-06
Mar-08
Mar-10
W
eeksofWestern
Consumption
0
500
1000
1500
2000
2500
Usc/lb
Critica l Stocks (LHS) Transit ion Stocks (LHS)
Ex ces s S toc ks (LHS) Nic kel Pri ce (RHS)
0
5
10
15
20
Mar-90
Mar-92
Mar-94
Mar-96
Mar-98
Mar-00
Mar-02
Mar-04
Mar-06
Mar-08
Mar-10
WeeksofWestern
Consumption
0
50
100
150
200
Usc/lb
Critica l Stocks (LHS) Transit ion Stocks (LHS)Ex ces s S toc ks (LHS) Zinc P rice (RHS)
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From Debt Mountains to Cash Piles
Mining sector forecast to be in a net cash position by the end of 2011
First time this has been the case in recent history
-150,000
-100,000
-50,000
0
50,000
100,000
2005 2006 2007 2008 2009 2010e 2011e 2012e
US$(m)
Net Cash
Source: Citigroup, October 2010
Use of improved spending power capex, M&A and dividends
A N T di R f th
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A New Trading Range for theDiversifieds?
Diversified companies have been trading in a lower PE range than during the last cycle (92-02)
Mining stocks trading at a discount compared to historic levels
Source: DataStream. Weekly data to 4 July 2011.
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Corporate Events
Mining sector financial strength has returned
Dividends resumed or increased
Gold companies initiating and/or increasing dividends
Dividends re-instated and increased across the mining sector
Recent examples: BHP Billiton, Rio Tinto, Xstrata, AngloAmerican, Teck Resources, OZ Minerals
Special dividends announced by Freeport, Vale and Antofagasta
Share buybacks
Vale announced and completed US$2 billion buyback between
September and November 2010 BHP Billiton announced US$10 billion buyback
Rio Tinto announced a $5 billion buyback
Debt markets are open at attractive rates
Teck refinanced high interest debt with longer dated and significantlylower interest debt
Rio refinanced Alcan-related US$5bn revolving credit line
2010 a record year for M&A, 2011 looks set to
follow suit In 2010, 186 deals worth US$134 billion that were either completed or
live at the end of the year
Top sectors for M&A: gold, coal and iron ore
So far in 2011:
Rio Tinto successful in its US$4bn bid for Riversdale
BHP Billiton buys shale gas assets from Chesapeake Energy forUS$4.75bn
Equinox announces a US$4.9bn hostile bid for Lundin Mining
Minmetals Resources announce U$6.3bn hostile bid for Equinox
Barrick announces US$7.6bn friendly takeover for Equinox
GMI P f li P f ( f
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GMI Portfolio Performance (net ofmanagement fees)
A$ 1m 3m YTD FYTD 1 Yr3 Yrs(p.a.)
5 Yrs(p.a.)
Sincelaunch(p.a.)
GMI Portfolio -0.7% -3.2% -3.4% 24.3% 17.9% -9.3% 6.5% 18.7%
HSBC Global Mining Index -2.6% -6.1% -6.9% 13.1% 7.3% -6.6% 4.3% 12.6%
A$ FYTD FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005
GMI Portfolio 24.3% 23.0% -48.6% 23.6% 45.3% 92.3% 24.5%
HSBC Global Mining Index 13.1% 19.8% -38.2% 16.7% 24.7% 74.0% 14.3%
Alpha +11.2% +3.2% -10.4% +6.9% +20.6% +18.3% +10.2%
Cumulative Performance
Annual Performance
Source: Internal. As at end May 2011. Returns for longer than one year are annualised. Launch date 6 April 2004.
Source: Internal. As at end May 2011. Financial Year (FY) is 30 June.
GMI P tf li P f ( t f
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1
GMI Portfolio Performance (net ofmanagement fees)
0
100
200
300
400
500
Ap
r-04
Jul-04
Oct-04
Ja
n-05
Ap
r-05
Jul-05
Oct-05
Ja
n-06
Ap
r-06
Jul-06
Oct-06
Ja
n-07
Ap
r-07
Jul-07
Oct-07
Ja
n-08
Ap
r-08
Jul-08
Oct-08
Ja
n-09
Ap
r-09
Jul-09
Oct-09
Ja
n-10
Ap
r-10
Jul-10
Oct-10
Ja
n-11
Ap
r-11
Indexedt
o1
00
GMI Portfolio Performance vs HSBC Global Mining Index since inception (in A$)
GMI Portfolio (A$) HSBC Global Mining Index (A$)
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Current Porfolio Positioning
AUM: A$280m
Gearing of 5.4%
Fixed income exposure
13.4% of portfolio (83% convertible debt, 17% corporate debt)
Running yield of 4.6%
Yield on book cost 6.5%
4.8% of portfolio in unquoted securities
Key event for portfolio: successful IPO of Glencore (7.2%)
Source: Internal, June 2011
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Diversi
fied
G
old
Coppe
r
IronOr
e
C
oal
Platin
um
Alum
inium
Nickel
Other
GMI Portfolio
HSBC Global Mining Index
Commodity exposure of GMI relative to benchmark
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GMI Top 10 Holdings
Source: Internal, as at end May 2011
Stock Geography Commodity Percentage Holding
Rio Tinto Global Diversified 9.1%
BHP Billiton Global Diversified 8.1%
Glencore Global Diversified 8.0%
Vale Latin America Diversified 6.4%
Teck North America Diversified 4.9%
Xstrata Global Diversified 4.5%
Freeport McMoran Global Copper 4.2%
Newcrest Australia Gold 4.2%
Anglo American Global Diversified 3.6%
First Quantum Minerals Africa Copper 2.8%
Stock Geography Commodity Percentage Holding
Rio Tinto Global Diversified 9.1%
BHP Billiton Global Diversified 8.1%
Glencore Global Diversified 8.0%
Vale Latin America Diversified 6.4%
Teck North America Diversified 4.9%
Xstrata Global Diversified 4.5%
Freeport McMoran Global Copper 4.2%
Newcrest Australia Gold 4.2%
Anglo American Global Diversified 3.6%
First Quantum Minerals Africa Copper 2.8%
Number of Holdings: 78
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Global Mining Investments Limited
Q & A
2
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2
Appendix
BlackRocks Natural Resources Team
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2
BlackRock s Natural Resources Team,
London
Agriculture
As at June 2011. *New senior portfolio manager to join Mining and Gold sector in August 2011
Richard DavisCatherine Raw
Tom Holl
Poppy AllonbyAlastair BishopJoshua Freedman
BlackRock Offices worldwide250+ equity analysts, 300+ fixed income analysts
BlackRock Solutions & Risk Management1,800+ Professionals
Evy Hambro & Robin Batchelor
Joint Chief Investment Officers
Portfolio Manager AssistantsSimon McClure &
Greg Bullock
Mining & Gold* Energy & New Energy
Desmond CheungRichard DavisPiers Holden
Product SpecialistsMalcolm Smith
Fiona Stubbs & Alex Ball
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