EXPLORATIONINSIGHTS–JOEMAZUMDAR

Growth - Margin versus Volume Adjusting for changing themes in the gold industry

Metal Investor Forum, November 2016 - Vancouver

www.explora>oninsights.com

The times they are a changing EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

2

“In the hay days, people were pushing for the volume rather than the value piece, just looking for any additional ounce almost no matter what it cost.”

Gary Goldberg, Newmont CEO ●  Investor driven emphasis on margin growth versus

production growth ●  Cost control, capex reductions, exploration cuts, impairments

and improve balance sheets ●  Barrick, Newmont, and Goldcorp have flat production profiles

and sold production ●  Barrick is focused on core assets in the Americas (75-80% of

its production profile), which have a B/E gold price of US$1,020

●  Hurdle rates of 15% at gold prices of US$1,200 (reserve prices)

Production declines forecast EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

3

Source: GFMS and Newmont Mining (Tom Brady presentation at DGG)

Will global mine production peak at ~100 Moz?

Reserves are depleting EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

4 Source: Company reports and Goldcorp

Major gold producers including G, NEM, ABX, NCM, AEM, K, AUY, AU, and HMY

Breakdown of Newmont’s EOY 2015 reserves EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

5

Source: Newmont

Down 8.5 Moz Acquisition (4.0 Moz) and additions (5.0 Moz) offset a 17.5 Moz drop due to Conga write down, production depletion and gold price change

8.5 Moz

Breakdown of Goldcorp’s EOY 2015 reserves EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

6

Source: Goldcorp

Up 1.6 Moz Acquisition (2.2 Moz), positive gold price change (+1.0 Moz) and additions (1.1 Moz) offset a 2.7 Moz drop due to production depletion and gold price change. If not for the acquisition of the Coffee gold project, Goldcorp would not have replaced reserves.

Adding marginal ounces is not a problem EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

7

Source: Newmont Mining

+/- US$100/oz = +/- 4 Moz change in reserves +/- US$200/oz = +/- 11 Moz change in reserves

+11 Moz

-11 Moz

-4 Moz

+4 Moz Base

Drop in capital expenditures EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

8

Source: SNL, Wood MacKenzie and Newmont Mining (Tom Brady presentation at DGG)

Steeper drop in development capex due to debt levels and hurdle rates

$10 B

$2 B

$6 B

$4 B

Drop in exploration expenditures EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

9

Source: SNL, Wood MacKenzie and Newmont Mining (Tom Brady presentation at DGG)

●  Low risk brownfield > High risk greenfield exploration

●  Goldcorp has cut greenfield exploration ●  80% of NEM’s US$200 M exploration

budget is for brownfields ●  We would argue that the only chance

to add quality projects is to find them

$10 B

$4 B

M&A in 2016 is suitor specific EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

10

Agnico Eagle’s M&A history – Buy and grow EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

11

Source: Agnico Eagle

Purchased - $43 to $186/oz Discovery - $16 to 46/oz

Coffee project – Buy and grow? EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

12

Coffee, he says, will grow into a 5 to 10 million ounce gold camp, “Minimum. That's the investment thesis.”

David Garofalo, Goldcorp CEO Global Mining Observer interview

Kaminak currently has a 2P reserve of ~2.1 Moz (US$190/oz)

Source: Goldcorp

Putting geopolitical risk into context* EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

13

Source: Agnico Eagle

*Randgold, Goldfields, Anglogold Ashanti would be considered high geopolitical risk companies

Fiscal discipline is recognized EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

14

Source: Agnico Eagle

Randgold has been emphasizing hurdle rates and lower reserve prices for years

How has the market adjusted? EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

15

●  Brokerage firms and banks – analysts, sales, bankers – paying attention again

●  Driven by the lack of quality exploration projects - corporate development team focused on junior mining companies

●  M&A weighed by fiscal discipline prevents a spending spree

●  Junior miners outperform gold price ●  More investors interested in exploration plays –

lower financing risk

Speed dating at the Precious Metal Summit EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

16

Source: Precious Metals Summit and Exploration Insights

Beaver Creek Precious Metals Summit 60% increase in buy side, 36% increase in corporate [20-23% of total), some juniors with 18 back-to-back meetings in one day

Footprints in junior companies EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

17

●  Kinross’ M&A strategy ● Quality asset ●  Transact-able ● Accretive ●  Jurisdiction

●  Kinross has JVs in B.C., Yukon and NWT ●  Goldfields JV to build Gruyere project in

WA ●  Barrick Gold has JV in Guyana ●  Goldcorp has JVs with companies near

Coffee project in Yukon ●  Anglogold Ashanti has a JV in Argentina ●  Yamana has a JV in Chile

$3.8 B worth of financings >$50 M EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

18

$445

$138$98

$66 $69

$0

$100

$200

$300

$400

$500

$0

$500

$1,000

$1,500

$2,000 Total ($ M, LHS)

Average ($ M, RHS)

Source: Dundee Securities and Exploration Insights

Cash flowing precious metal companies

~$890 M worth of financings from $10-$50 M EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

19

$19

$27$30

$23

$31

$18$15 $15

$14

$0

$10

$20

$30

$40

$50

$0

$100

$200

$300

$400

$500 Total ($ M, LHS)

Average ($ M, RHS)

Source: Dundee Securities and Exploration Insights

Explorers appear

~$370 M worth of financings <$10 M EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

20

Source: Dundee Securities and Exploration Insights

Explorers dominate

Junior mining provides leverage (5x) to gold EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

21

$1,000

$1,080

$1,160

$1,240

$1,320

$1,400

80

120

160

200

240

280

8-O

ct-1

528

-Oct

-15

17-N

ov-1

57-

Dec

-15

27-D

ec-1

516

-Jan

-16

5-Fe

b-16

25-F

eb-1

616

-Mar

-16

5-Ap

r-16

25-A

pr-1

615

-May

-16

4-Ju

n-16

24-J

un-1

614

-Jul

-16

3-Au

g-16

23-A

ug-1

612

-Sep

-16

2-O

ct-1

622

-Oct

-16

11-N

ov-1

6

Gold price (U

SD per ounce)

GD

XJ

and

EI S

ubs

(Ind

exed

, 100

=O

ct

8, 2

015)

GDXJ

EI subs

Gold

Source: Google Finance, Investing.com and Exploration Insights

Au is up +15% GDXJ is up 80%

Summary EXPLORATIO

NIN

SIGHTS–JOEM

AZUMDAR

22

●  Profitability over volume ●  Reserves are depleting faster than the rate of

replacement ●  Production is forecast to decline ●  Drop in capex due to balance sheets and more

fiscal discipline ●  Drop in exploration with low risk brownfield favored

over greenfield ●  Growing interest in junior explorers ●  Acquire quality projects not marginal ones ● Grow ounces post acquisition ● District scale land packages ● Mining friendly jurisdictions ● No fatal flaws