IFA INTRODUCTION PACK

PROFILE

SA Bullion is a specialist investment manager

that provides a unique investment service for

directly-owned physical gold bullion

WHY OWN PHYSICAL GOLD?

GOLD AS THE CURRENCY OF THE BAD TIMES

In the good times gold is a commodity. In the bad times gold is a currency.

We are in the bad times and gold is asserting itself as the currency on the

ascendancyascendancy

COMPETITOR TO CASH

We do not see gold as an alternative to shares, bonds or property but as an

alternative to holding cash in the bank

SOLVENCY

Physical gold is a safe haven as it has no counterparty or credit risk ie. It

cannot go broke

PORTFOLIO DIVERSIFIER

In the ‘bad times’ gold should be a component of investment portfolios so as

to reduce risk and to benefit from its outperformance of cash

WHEN DOES GOLD QUALIFYAS CURRENCY?

� When it is physical gold bullion

� When it is valued only for its gold content

� When it is owned outright without an intermediating financial

instrument

� When it is deemed legal tender and therefore attracts no VAT

� When it is fully underwritten by the central bank

� When physical delivery to the owner is a fully-guaranteed right

The Krugerrand is the ideal instrument as it fulfils all of the above

when directly owned

DIFFICULTIES WITH OTHER FORMS OF GOLD OWNERSHIP

GOLD MINING SHARESSouth African gold mining shares today do not represent a proxy for gold as

they confront various business and mining challenges

UNWROUGHT GOLDPrecious Metals Act No. 37 of 2005 precludes almost all forms of gold bullion

Ownership

VAT Gold in unwrought form (including minted bars) attracts 14% VAT

GOLD ETFETF ownership is not gold ownership. It entails ownership of an unsecured

debenture and entertains no right of physical delivery

SHORTCOMINGS OF THE TRADITIONAL RETAIL CHANNEL FOR KRUGERRANDS

SUPPLY

The supply of Krugerrands into the retail market is limited such that serious investors can confront supply shortagesconfront supply shortages

FRICTION CHARGES

Retailed Krugerrands attract a large and uneconomic transaction charge on both the buy-and sell- ends

LOGISTICS

Retailed Krugerrands entail considerable cost and difficulty in transportation, vaulting and insurance

HAZARD

Retailed Krugerrands make the owner a potential target in a high-crime environment

LIQUIDITY

Retailers may be unwilling to repurchase Krugerrands at times of market stress

THE SA BULLION VALUE PROPOSITION THE INVESTMENT CHANNEL FOR KRUGERRANDS

Our offering, operating under a special dispensation of the

South African Reserve Bank, includes:

� massive proprietary supply due to special dispensation� massive proprietary supply due to special dispensation

� acquisition of gold at wholesale prices

� the Krugerrand is legal tender, therefore no value-added tax

� full vaulting, insurance and safe custody

� elimination of transport and logistics

� direct ownership

� perfect liquidity on redemption

� on exit clients’ receive full gold price, no charges

� clients may elect physical delivery

PRODUCTTHE BULLION GOLD FACILITY

� directly-held call account for funds

� ad hoc or recurring contributions – min investment

� forms and processes similar to standard unit trust practise

� quick and simple entry and exit

� physical delivery option

� statements and reports

� pricing

� upfront and ongoing fees

� three choices for fee settlement

� online view of funds and fund flows

� non-resident investment permitted

COMPARISON OF TRANSACTION COSTS

75.0%

50%

60%

70%

80%

90%

100%

96.0%60%

70%

80%

90%

100%

5.0%

10.0%

10.0%

0%

10%

20%

30%

40%

50%

Traditional Retail Channels

Refining and Minting Dealer Premium / Initial Fee Dealer Sale Spread Net Investment

3.0%1.0%

0%

10%

20%

30%

40%

50%

SA Bullion Investment Channel

FINANCIAL ADVISOR

� Role – Advisory / Distribution / Intermediation � FSP contract� Remuneration (a ‘first’ on physical gold)� Remuneration (a ‘first’ on physical gold)� Commission runs� Statements and reports� Online viewing of funds and fund flows� Marketing materials and supporting presentations� Forms� Website� Ease of administration

FEES

SA BULLION IFA PLATFORM

THE BULLIONGOLD FACILITY FEES SA BULLION IFATHE BULLIONGOLD FACILITY FEES SA BULLION IFA

INITIAL FEES 1% - 4.5% 1% 0% - 3.5%

ONGOING FEES 2.0% 1.5% 0.5%

EXIT FEES 0.0% 0.0% 0.0%

REGULATORY & CORPORATE

• The SA Bullion business is licensed and regulated by the

Financial Services Board

• The firm conducts its investment service in terms of a special • The firm conducts its investment service in terms of a special

dispensation of the South African Reserve Bank

• The firm operates in terms of a supply and custodial agreement

with Rand Refinery Limited

• The company is subject to full FAIS audit by Ernst & Young

• Due diligence materials and documentation available on request

• SA Bullion maintains full corporate offices in Woodstock, Cape

Town

CORPORATE ORGANOGRAM

Directors: Hilton Andrew Davies, Helen

Anne Davies, Imran O’Brien, Clint Paul

O’Brien

Directors: Hilton Andrew Davies, Imran

O’Brien, Clint Paul O’Brien

SA Bullion Management (Pty) Ltd SA Bullion Investor Services (Pty) Ltd SA Bullion Management (Pty) Ltd

[the management company]

SA Bullion Investor Services (Pty) Ltd

[the administration company]

Responsibilities

Group: Hilton Davies

Retail Business: Imran O’Brien

Operations: Clint O’Brien

IT: Helen Davies

Responsibilities

Retail: Imran O’Brien

Operations: Clint O’Brien

Investor Relations: Pano Chrysomallos (BCom)

Media Relations: Merle O’Brien (MPhil)

FSP APPLICATION PROCESS

� Due Diligence

� Complete FSP Application Form

� Checklist of Supporting Documentation� Checklist of Supporting Documentation

� Contract Approval

� FSP Code Activation

� Accreditation Session

Def n: the process of adding value to a metal, mineral or commodity.

Gold Mining Companies

Rand Refinery Limited& SA Mint

SA Bullion SA Bullion FinancialAdvisor

The SA Bullion Gold Beneficiation Chain

GoldBeneficiation

Chain:

Role

Extraction Manufacturing Wholesale/Retail Distribution & Sales

Regulated By: Department of Minerals & Energy

South African Reserve Bank Financial Services Board

South Africa