PRECIOUS METALS, DIAMONDS & GEMSTONESINVESTMENT SUMMIT

IRONMONGERS’ HALL, CITY OF LONDON ● WEDNESDAY, 6 APR 2011www.ObjectiveCapitalConferences.com

Investing in gold equitiesTim Weir – Investment Director, Wessex Asset Management

2March 11

W E S S E X G O L D F U N D

Who are we - Wessex Asset Management Pages 3-5

What are the characteristics of the gold market(s)

and how can we make money for our investors?

Pages 6-11

Stock picking in gold equities

Does it work?

Pages 12-14

Appendices and disclaimer Pages 15-24

Wessex Asset Management

4March 11

� 10+ year hedge fund track record co-managing the Wessex Asia Pacific Fund (WAPF).

� Wessex Natural Resources Fund manager since 2004 launch.

� Wessex Gold Fund manager since 2007 launch

� Economist by training

� MA Oxford PPE 1980

� AIIMR since 1982

� Set up Abbey Commodity and Energy Trust 1982

� Head of equities, Swiss Bank Corporation institutional funds London 1988-1993

� Managed SBC’s GoldPortfolio, one of the world’s biggest gold equity funds, which won the Bopp-FinanzSwiss mutual fund prize 1990-93

� Director of European equities at Nat West Investment Management 1993-1996

Tim WeirChief Executive,

Investment Director

Fund Manager:

Wessex Gold Fund

Wessex Natural Resources Fund

Wessex Asset Management

5March 11

Peter Chesterfield Chairman,

Investment Director

� 10+ year Asian Hedge Fund track record co-

managing the Wessex Asia Pacific Fund (WAPF)

� Co-manager Wessex Natural Resource and Gold

funds

� MSc (Honours) Mining Geology

� Exploration Geologist, Project Geologist,

Investment Analyst in ANZ 1979-82

� Mining analyst at Prudential in London 1982-84

� Managed Abbey’s Commodity and Energy trust

(ACET) and resource portfolios (see appendices).

� 14 year Asian track record managing Abbey

Life’s Asian Pacific Trust (AAPT) 1985-99.

Responsibility for over $1 billion of assets at

Abbey Life

The Gold bull market in US dollars

6March 11

USD

The gold bull market is not driven just by US$ weakness…

Gold Price in Major Currencies

7March 11

Source: Bloomberg

AUD

EURO

not driven just be US$ weakness

… There is an ongoing gold bull market even in strong currencies

8March 11

Gold is still in a bull market

Strong gold supply / demand fundamentals

1. Real interest rates are still very low or negative

2. Strong consumer demand, increasingly from newly affluent Asians

3. Asian central bank buying – Iran the latest to diversify reserves

4. Perceived as a safe haven in times of financial instability

5. Increased investment demand assisted by launch of ETFs

6. Falling gold mine production (notably South Africa)

Cross-currents

1. Gold normally benefits from US$ weakness and rate cuts

2. Gold as each-way bet on inflation and deflation risks

3. Can lose out tactically on FX moves and liquidity drying-up

4. End of QE, high interest rates and end of inflation fears would signal end of gold

bull market

Equities

1. Equities have ‘optionality’ and are currently cheap relative to bullion

Gold market s – the new geography

9March 11

North America: Valuation premium

justified by lower political risk.

Some production expansion from

reviving older mines.

Australia: Most pure Oz gold

plays are small (except

Newcrest). Oz-listed stocks

producing from Asia, Africa.

South Africa: Increasing depth, power supply issues

and falling grades make cost control very difficult.

Politics a worry.

West Africa: The new frontier. Exciting growth eg

Tasiast mega-mine. Politics has improved significantly.

South America: Some

interesting assets,

mostly owned by North

American majors.

Russia & FSU: Some opportunities but

major expropriation risk.

China: World’s biggest producer, but

companies are fairly opaque.

Defining a profitable niche 1

10March 11

� Gold is in a long-term bull market, but one characterized by high

volatility and enormous stock divergence – how to profit from this?

� Gold equities have leverage to bullion through operating gearing

and enhancing the value of reserves in the ground

� Commodity equities have accessible stock alpha due to the generally

poor quality of research. Analysts tend to be relatively

inexperienced. Good stock pickers should be able to beat a gold

equity index or ETF.

� Wessex principals have been meeting mine managers, going

underground and analyzing gold mines since early 1980s. No special

magic, just hard work and knowledge which cannot be replicated in

front of Bloomberg screens

Sustainable excess returns can be generated by a L/S gold equity

fund because of persistent characteristics in the gold market

Defining a profitable niche 2

� A good stock picker can add more value in a long/short fund than

in a long-only vehicle – the gross can be higher, the net can be

higher or lower, shorts can be used for alpha or for protection

� Gold shares should do better than bullion in a bull market

� CTAs are better placed for protecting downside and making

money in bear markets, but will normally not give full exposure

in a bull market

� Value can be added by timely exposure to silver, diamonds and

PGM equities

11March 11

A long/short gold equity fund offers differentiated value –

not replicated by CTAs, long-only funds or holding physical gold

Investment Philosophy

12March 11

Resource markets Ideas before numbers – correlations are unstable

(no mechanistic data mining )

Stereoscopic investment Dynamic equilibrium between bottom-up and top-

down

Diversification By strategy and theme, reduces risk and volatility.

More arbitrage when unclear on directional bets

Style chameleon Value, growth and momentum at appropriate times

Risk Take only the risk we want, understand and can

turn into value

Technical analysis/charts Used to assist in timing

WGF trade examples: AUSGOLD

13March 11

A new gold province in Western Australia?

WGF trade examples: PETRA DIAMONDS

14March 11

Ex-De Beers management cutting costs and innovating in diamonds in southern Africa

WNRF Trade examples 1:

15March 11

Short trade – Sons of Gwalia

(Gold, Australia):

� Stock trading on a very

high valuation despite

our concerns that the

balance sheet remained

stretched.

� The hedge book was

progressively getting

further into the red,

while reserves were not

being replaced.

� RESULT: company

announced profit-

warning in July 2004 and

entered administration in

August.

Source: Bloomberg,WAM

0

0 .5

1

1 .5

2

2 .5

3

BUY

SELL-37

-67

-86

-100

-65

-1 2 0

-1 0 0

-8 0

-6 0

-4 0

-2 0

0

0 9 /0 6 /2 0 0 4

Cumulative (1000's

Shares) Delisted

Crossed with Morgan Stnley after delisting,

short covered at 0.01

Uncertainty over reserve replacement

and company cash balance

Risk Parameters

16March 11

WGFT Long / Short Exposure History

-50%

0%

50%

100%

150%

200%

250%

May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07

WGFT = Wessex Gold Fund THEORETICAL = using actual precious metal sector weightings of the Wessex Natural Resource Fund (WNRF) May 2004 to July 2007 and scaling the weightings up such that the average net position over the life of the WGFT would have been 100% net in these sectors. Average precious metal sector weight in WNRF to date has been 23% and therefore the attribution has been scaled up by a constant factor of 1/23%.

Source:WAM

WNRF Market Cap of Precious Exposures

Snapshot

-5%

5%

15%

Large <5bn Mid<1bn Small<300 Commodity

Source, Definition : WAM 31st May 2006

Summary

17March 11

� We can make very significant money in the continuing gold bull

market.

� Good stock picking and market timing can turn this into a longer-term

profitable hedge fund opportunity

� Wessex team has a strong fund track record and portfolio managers

who are very experienced in gold markets

� A dedicated L/S gold fund, run more aggressively in terms of the net

and stock concentration can achieve very strong returns

WGF performance versus gold bullion and gold shares

18March 11

WGF Outperformed Gold Shares Index by 12% in 2010

-

50

100

150

200

250

AMEX GOLD BUGS INDEX (^HUI) Wessex Gold Fund (WGF) Gold Bullion

2007 2008 2009 2010 2011

WGF 3.7% -27.5% 35.5% 45.3% -6.8%

HUI 4.2% -26.1% 42.2% 33.4% -1.6%

W E S S E X G O L D F U N D

‘A’ J F M A M J J A S O N D YTD

2007 5.9% -4.8% 3.1% 3.7%

2008 5.2% 10.3% -9.6% -11.1% 9.6% 2.1% -8.5% -12.8% -5.8% -39.5% 27.2% 20.5% -27.5%

2009 -3.0% 0.3% 9.2% -3.1% 16.2% -8.7% 1.5% 1.5% 10.5% -5.2% 18.3% -2.9% 35.5%

2010 -7.5% 4.1% 0.9% 5.2% -2.5% 2.7% -1.8% 6.0% 13.0% 4.9% 1.2% 13.7% 45.3%

2011 -9.2% 2.6% -6.8%

Reported performance is net of fees. Performance numbers shown are records of past performance and as such do not guarantee or provide a guide to future performance.

Wessex Asset Management

20March 11 20March 11

Peter Chesterfield

Tim Weir

Gabrielle Knights

Anna Donald

Brendan Long

Sarah Martin

Nicola Dady

Douglas Sloane

George Vere-Laurie

Mishcon De Reya

Throgmorton

IMS Consulting

Treken

Chairman and Investment Director

CEO and Investment Director

Fund Manager

Fund Manager

Consultant, hydrocarbons

Associate Director, Operations

Middle Office Executive

Marketing Director

Consultant, risk and business development

WAM Legal Counsel

WAM Accounting

Compliance Consultants

Technology Support

Fund Service Providers

21March 11

Investment Manager Wessex Asset Management Ltd.

8 Queen Street

London WIJ 5PD

Prime Broker / Custodian Morgan Stanley

25 Cabot Square, Canary Wharf

London E14 4QA

Auditor Ernst & Young

Harcourt Centre, Harcourt Street

Dublin 2, Ireland

Administrator BNY Mellon Alternative Investment Services

Unit D1, Balmoral Estate, Kells Road

Navan, Co. Meath, Ireland

Legal Counsel Mishcon De Reya

Summit House, 12 Red Lion Square

London, WC!R 4QD

Legal Counsel (offshore) Maples and Calder

PO Box 309, Georgetown

Cayman Islands

Fund Overview

22March 11

Minimum Investment 500,000 USD

Subscriptions Monthly

Redemptions Monthly 30 calendar day notice

Management Fee 1.5% Share Class A, 1% Share Class B

Incentive Fee 20% Share Class A 15% Share Class B

Other Fees None

High Water Mark Yes

Lockup None Share Class A ,12 months Share Class B

Early Redemption Fee None

Benchmark HUI Gold Bugs Index, XAU Gold and Silver Index in US$

Volatility Benchmark HUI Gold Bugs Index

Strategy Long/Short Gold and Precious Metals Equities

Region Global

Domicile Cayman Islands

Listing Irish Stock Exchange

Target Return 25% compounded per annum

Target Volatility none

Abbey Commodity & Energy Trust Limited (ACET)

23March 11

Offer to Offer Price Basis (Net Income Reinvested)

Fund

FT GOLD MINES 142.0 80.7 127.5 89.7 310.1

FTA OILS 175.7 227.7 420.0 375.7 669.2

PLND SVNGS COMMY & ENERGY 184.6 178.9 267.7 205.6 495.2

ABBEY COMMODITY & ENERGY 233.7 1 272.0 2 409.7 1

ALLIED DUNBAR MET MIN COM 178.1 17 169.5 17 248.7 11 237.0 3 481.4 6

BG ENERGY 167.8 23 268.0 3

COUNTY ENERGY 135.2 28 122.5 24 176.4 16

EFM RESOURCES 162.4 25 148.8 20

F&C NATURAL RESOURCES 195.8 10 179.4 13

GARTMORE COMMODITY 177.5 18 183.2 12 305.6 4 232.6 4 616.7 3

GARTMORE GOLD SHARE 197.2 9 176.5 16

GARTMORE OIL & ENERGY 168.7 21 159.6 19 251.5 10

GOVERTT GOLD & MINERALS 227.3 2 206.8 6

HENDERSON GLOBAL RESCRCS 201.7 7 193.0 8 275.3 8 242.4 2 676.6 1

HENDERSON GOLD 203.9 5

HILL SAMUEL NATURL RESRCS 198.5 8 210.3 5 300.6 5

LEGAL & GENERAL NAT RESOR 201.9 6

LLOYDS BK ENERGY INTERNTL 141.9 27 143.6 22 213.2 15

M&G COMMODITY & GENERAL 189.6 13 184.6 11 324.4 3 270.4 1 638.8 2

M&G GOLD & GENERAL 183.7 16 191.0 9

MIDLAND BK COMMODITY 171.4 20 177.3 15 262.9 9 188.9 7 468.5 7

MIM BRIT COMMODITY SHARE 167.8 22 178.7 14 247.9 12 160.7 9 401.1 8

MIM BRIT GOLD 186.0 15 239.6 4

WIM BRIT UNIVERSAL ENERGY 149.2 26 92.1 25 146.8 17 84.5 10 223.5 10

NM SCHRODER GOLD 204.3 4 197.0 7

S&P COMMODITY SHARE 186.2 14 190.5 10 277.8 6 220.8 6 528.4 4

S&P ENERGY INDUSTRIES 164.1 24 141.9 23 220.0 14 162.3 8 389.4 9

S&P EXPLORATION 217.5 3 293.1 1 400.0 2

TARGET COMMODITY 189.7 12 146.5 21 239.5 13 224.3 5 516.2 5

TARGET GOLD 174.7 19 165.7 18 275.6 7

TSB NATURAL RESOURCES 192.9 11

TRUST AVERAGE

Source:

Current Valueof £100 Invested over various periods to 1st October 1987

Planned Savings Magazine UK

120 Months

28 FUNDS 25 FUNDS 17 FUNDS 10 FUNDS 10 FUNDS

12 Months 36 Months 60 Months 84 Months

494.1184.6 185.2 269.2 202.4

ACET in Planned

Savings Magazine

� Managed by Tim Weir and

Peter Chesterfield

� Ranked 1st for 12mths

� Ranked 2nd for 36mths

� Ranked 1st for 60mths

DISCLAIMER

24March 11

Important Notice:

The Wessex Gold Fund THEORETICAL (WGFT) should be viewed solely as a calculation of the precious metal sector performance of theWessex Natural Resource Fund (WNRF) whilst as a variable part of the WNRF portfolio. The actual performance of the proposed Wessex GoldFund could and probably will have different characteristics. These differences include but are not limited to regional, concentration, gross andfund focus.

This document is intended solely for publication and distribution to the recipient and may not be passed on or disclosed to any other person.This document is for information only and is not an offer to sell or an invitation to buy shares in the Wessex Gold Fund. In particular, it doesnot constitute an offer or solicitation in any jurisdiction where it is unlawful or where the person making the offer or solicitation is not qualifiedto do so or the recipient may not lawfully receive any such offer or solicitation. It is the responsibility of any person in possession of thisdocument to inform themselves of, and to observe, all applicable laws and regulations of relevant jurisdictions.The information and anyopinions contained herein have been obtained from or are based on sources which are believed to be reliable, but the accuracy cannot beguaranteed. No responsibility can be accepted for any consequential loss from this information. Prospective investors should review theprospectus for the WGF before making an investment decision and should rely only on the information contained in the prospectus. Prospectiveinvestors should also inform themselves, and should take appropriate advice, on the legal requirements and as to the possible taxconsequences, foreign exchange restrictions or exchange control requirements that they may encounter under the laws of the countries of theircitizenship, residence or domicile and that may be relevant to the subscription, purchase, holding, exchange, redemption or disposal of anyinvestments.

The value of investments and income derived therefrom can decrease as well as increase (this may be partly due to exchange rate fluctuationsin investments that have an exposure to currencies other than the base currency of the Fund). Performance numbers shown are records of pastperformance and as such do not guarantee future performance. Regulated in the United Kingdom by FSA.

This document is issued by Wessex Asset Management Limited. The Wessex Gold Fund (the ‘fund’) is defined as an' Unregulated CollectiveInvestment Scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently,this document is only made available to Professional Clients and Eligible Counterparties as defined by the FSA and to persons falling withinthe Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001. Shares in the fundshould only be purchased by persons with professional experience of participating in unregulated schemes and any other person who receivesthis document should not rely upon it.

LONDON OFFICE BOURNEMOUTH OFFICE Douglas Sloane

Tel: 44 (0) 207 059 2895 Tel: 44 (0) 1 202 200 930 Director of Marketing

Fax: 44 (0) 207 059 2901 Fax: 44 (0) 1 202 200 931 douglassloane@wessexam.co.uk

8 Queen Street Lorne Park House, Lorne Park Road 44 (0) 207 659 2893

London WIJ 5PD Bournemouth BH1 1JJ www.wessexam.co.uk

Authorized and regulated by the FSA and registered with the SEC