October 2005

Evy Hambro

Managing Director of Merrill Lynch Investment Managers

Investment Manager of Global Mining Investments

2

Agenda

• MLIM Natural Resources Team

• Sector Summary

• The Cycle

• Strategy & Outlook

• GMI – The Rationale

• Fund Performance

3

Who are MLIM Natural Resources?

MLIM Natural Resources Team

• Started by Julian Baring in 1991 at former Mercury Asset Management

• Team has grown considerably since then with AUM of US$12bn* and a range of

products including mining, gold and energy funds as well as a hedge fund.

• Core of team has been working together for over 10 years

• Only Natural Resources Team rated “AAA” by Forsyth Partners and S&P Group

*As at 30 September 2005

4

Natural Resources Team Structure

Poppy BuxtonEnergy

New Energy Technologies

Robin BatchelorEnergy

New Energy Technologies

Richard DavisGold

ML Gold Metal Open FundML Gold Fund

ML Int. Gold Fund

Evy HambroGold

Diversified Mining

MLIIF World GoldMLIIF World Mining

Global Mining Investments

Catherine MayAnalyst

As at October 2005

Graham BirchChief Investment Officer

ML Gold & GeneralML World Mining Trust

Simon McClureAdministration

Sandy ChristieAnalyst

MiningEnergy

MLIIF World EnergyML New Energy Trust

MLIIF New Energy

Natural Resources Hedge Fund

Janakan ArulkumarasanAnalyst

Sector Summary

6

• 2004 saw a string of records broken by the mining majors.

• GMI’s top four holdings (CVRD, BHP Billiton, Rio Tinto and Xstrata) all reported record earnings, cash flows and paid record dividends in 2004

• Results for 1H 2005 are even better and 2005 set to be another blockbuster year

• Signs for 2006 are very encouraging

• Huge cash flows are triggering new trend of capital management:

– Since June 2004, majors* have returned over US$7bn to shareholders through dividends and sharebuybacks.

• In our view, there is more to come

High Metal Prices translate into Record Earnings

Source: Company Financial Results, Reuters

This is an industry enjoying the best market conditions for a generation

*Anglo American, BHP Billiton, Rio Tinto, Xstrata

7

Mining Shares vs Metal Prices

Source: Datastream. Data as at 10 October 2005

80

100

120

140

160

180

200

Sep-03

Dec-03

Mar-04

Jun-0

4

Sep-04

Dec-04

Mar-05

Jun-0

5

Sep-05

Inde

xed

to 1

00

HSBC Global Mining Index (US$) MG Base Metal Index (US$)

Short term market jitters

8

Commodity Prices

Base Metals

• Base Metal Prices have held onto strong performance

• Some metals, such as copper, have hit multi-decade highs

• On the whole most metal prices trading above long term average levels

• Demand growth in key consuming nations has been better than forecast

• Supply growth has been muted by delays, strikes and higher costs

Bulk Commodities

• Bulk commodities have been outstanding

• Record price increases in iron ore, thermal and coking coal

Precious Metals

• Gold price has broken out to new long term highs

• Platinum and sister metals have continued strong run

9

Base Metals – Index, Zinc, Nickel & Copper

Source: Datastream. Data as at 30 September 2005

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Tonnes

100

120

140

160

180

200

220

240US$

LME Base Metal InventoriesMG Base Metal Index (RHS)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Tonnes

100

300

500

700

900

1100

1300

1500

1700

1900US$

LME Zinc InventoriesZinc Price (RHS)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Tonnes

100

2100

4100

6100

8100

10100

12100

14100

16100

18100US$

LME Nickel InventoriesNickel Price (RHS)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Tonnes

100

600

1100

1600

2100

2600

3100

3600

4100

4600US$

LME Copper InventoriesCopper Price (RHS)

10

Iron ore price vs. market expectations

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2000 2001 2002 2003 2004 2005 2006

% c

hang

e in

con

tract

pric

e

Analyst forecast % change* Actual % change

• Market has underestimated price increases over last 3 years• Analysts are having to revise expectations for 2006 upwards• This has been key value and growth opportunity in the sector

Source: Internal. *Survey of three major mining houses. Next year forecasts taken as at date of current year’s price negotiations

11

Base metal prices vs. market expectations

• Analysts are still underestimating the strength of the market

• Upgrades to price estimates occurred as expected, but still remain below current spot prices for most metals

Source: Reuters 2005 Base Metals Poll (January & July 2005), DataStream. *Spot prices as at 30 September 2005

Earnings upgrades throughout 2005 as analysts revise their commodity price forecasts

59

701

43

158

84

YTD 05 Average

59

597

36

122

80

2006 forecasts

58

687

42

144

82

Est 2005(July ’05)

64

616

44

179

84

Spot Prices*

54Zinc

590Nickel

38Lead

124Copper

81Aluminium

Est 2005 (Jan ’05)USc/lb

12

Analysts upgrading forecasts

Source: UBS, ML & JP Morgan research notes (September 2005)

13

25000

30000

35000

40000

45000

50000

55000

1999 2000 2001 2002 2003 2004 2005

Japa

nese

Yen

Gold Bullion (Yen/Troy oz)

Gold Price

240260280300320340360380400420440460480500

1999 2000 2001 2002 2003 2004 2005

US

$

Gold Bullion (US$/Troy oz)

Source: Datastream. Data as at 7 October 2005

Gold price hits 18 year high...

220

240

260

280

300

320

340

360

380

400

1999 2000 2001 2002 2003 2004 2005

Euro

Gold Bullion (Euro/Troy oz)

...hitting highs in other currencies too

300

350

400

450

500

550

600

650

700

1999 2000 2001 2002 2003 2004 2005

A$

Gold Bullion (HK$/Troy oz)

14

Gold Market Fundamentals: Strong Demand

• Total gold demand in H1 2005 increased by 21%

• Jewellery demand at record high: $38bn for year to June 2005, +17% in H1 2005:– India (~20% total demand) saw highest ever quarterly demand in Q2’05, increasing 42%

yoy in tonnage terms.

– China saw jewellery demand grow by 11% in Q2’05. Now 3% of global market – still a long way to go!!!

• Investment demand up 66% for H1 2005

Source: World Gold Council, GFMS, Bloomberg. All percentages show growth in tonnage terms

Jewellery demand 1980-2005, tonnes and US$ StreetTRACKS Gold Trust shares in the market

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05

No.

of s

hare

s (m

illio

n)

15

Gold Market Fundamentals

Limited Supply

• Production declined by 4% in 2004 - largest annual decline since the 1940s

• Central Bank sales down 19% in 2004

• Total supply down 13% in 2004

Strong market fundamentals supportive of a higher gold priceSource: AngloGold Ashanti, World Gold Council, MLIM

Resource Replacement

0

10

20

30

40

50

60

70

80

90

1995-1998 1999-2004

Mill

ion

Oun

ces

per a

nnum

Production rate Discovery rate

• Since 1998, exploration budgets of gold mining companies cut by 76%

• Discoveries at all-time low

• Less than 30% conversion of discovered ounces to production

The Cycle

17

The Commodity Cycle

Market wrestling with the question:

Is this the peak of a normal cycle or the early stages of a supercycle?

• The argument for a supercycle:

– DEMAND – the China effect (and don’t forget India)

– SUPPLY – lack of investment in the previous decade and long lead times limits supply-side reaction

– Consolidation of the industry

• To a greater or lesser extent the same patterns can be found in all commodities

18

Chinese economy remains buoyant

Chinese Quarterly GDP Growth yoy

6

6.5

7

7.5

8

8.5

9

9.5

10

10.5

11

Q1 97Q3 97Q1 98Q3 98Q1 99Q3 99Q1 00Q3 00Q1 01Q3 01Q1 02Q3 02Q1 03Q3 03Q1 04Q3 04Q1 05

%

• GDP growth in Q2 2005 of 9.5%

• Industrial production growth in August 2005 of 16.0%

• Fixed Asset Investment growth in August 2005 of 27.4%

Source: National Bureau of Statistics of China

19

Urbanisation of China fuels construction growth

• Market fears of slowdown appear unfounded

• Shakeout of “speculative” developers earlier this year lead to lower growth

• Return of high growth rates in construction activity and steel consumption

• Chinese stainless steel consumption thought to grow at an average of 9% pa for next decade

• Not just in China – 2005 first year in history that more people live in cities than rural area

Chinese Property Construction Index Chinese Steel Consumption

Source: BHP Billiton, UBS, September 2005

20

Demand

• Industrialisation and urbanisation of China is having a huge effect on the commodities markets

• China is fast becoming the largest consumer of raw materials in the world

China’s Share of Global Demand

Source: UBS, Chinese Customs, Datastream

1990 2005E

0%5%

10%15%20%25%30%35%40%

Oil Iron ore Gold Aluminium Steel Copper Nickel Zinc

21

Mining Sector Consolidation

• Company balance sheets strong, debt at all time low, cash flows at all time high

• Quality growth opportunities remain sparse

• Rising capex (machinery, labour, raw materials) deterring management from to building new operations

Conclusion:

Consolidation will continue as companies look to increase production growth cost effectively in this high commodity price environment

e.g.

– Inco and Falconbridge (October 2005): US$11bn

– BHP Billiton and WMC Resources (August 2005): US$7bn

– Goldcorp and Wheaton River (February 2005) US$2bn

• We believe there are still more to come...Anglo American amongst others?

22

Real Base Metal Prices since 1979

0

20

40

60

80

100

120

140

1979 1984 1989 1994 1999 2004

Inde

xed

to 1

00

Real Base Metal Prices

• Are we experiencing a structural change in prices?

• Better capital discipline, consolidation of the industry, lack of new supply and unprecedented demand event (China) have lead to a real price increase.

Source: Datastream.

Portfolio Strategy & Outlook

24

Strategy

• General Themes– Aggressive view on demand vs supply

- eg China vs lack of new projects

– Bias towards shareholder return focused management

– Limited “pure exploration” but selective holdings in high growth juniors

– Focus on value and commodity beta

– Increasing emphasis on emerging new producer nations eg China, Africa, Former Soviet Union and India

• Key is to balance mix of core holdings with smaller high growth opportunities and companies with significant commodity beta

• Aim to provide exposure to global mining sector rather than just Australian mining investments

25

Outlook

• Record earnings and cash flow yet again this year

• Deficits by and large intact whilst inventories remain stubbornly low

• Change in market structure could reverse real price decline trend

• Management determined to deliver returns to shareholders

• Valuations at attractive levels

• Gold price showing potential to have major break out above US$500oz

• Other precious metals enjoying high prices

GMI – The Rationale

27

GMI – The Rationale

Global Mining Investments Ltd• Rationale

– Australian resources sector has shrunk following takeovers by international companies during the last decade

– Australian investors unable to access the opportunities outside the country

– Not all of the best natural resources deposits are located in Australia

– Growth in sector coming from “new” countries eg Russia, China, Zambia, India

• Portfolio objective: to exceed the return of the HSBC Global Mining Index over the medium to long term. GMI invests globally in natural resource companies, predominantly metals and mining companies.

• Launched 6th April 2004 with AUM of A$75.2m

• Strong portfolio performance since inception; AUM now A$120m*, +60% since launch

*As at 30 September 2005

Fund Performance

29

Global Mining Investments

• At launch April 2004 AUM A$75.2m

• As at end Sept 2005 AUM of A$120m; +60% since inception

Source: Bell Potter. Data to 30 September

GMI v HSBC Global Mining Index $A to 30 September 2005

85.0

95.0

105.0

115.0

125.0

135.0

145.0

155.0

165.0

Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05

HSBC AUD

GMI AUD

30

Key Performance Drivers

• Large weighting in diversified companies key to majority of performance

• Selective exposure to individual base metals

– e.g. copper vs. aluminium

• Excellent performance from key growth stocks

– e.g. First Quantum (+125.3%), Eramet (76.6%), Grupo Mexico (+72.4%), ZijinMining (+71.3%), Oxiana (+61.5%), Aur Resources (+54.9%)*

• Corporate activity within sector

– BHP Billiton & Xstrata battle for WMC Resources

– Noranda bid for Falconbridge

– Xstrata & Inco battle for Falconbridge

*Share performance in A$, 30/06/04 to 30/09/05. Source: Datastream

31

Top 10 Holdings

Source: Internal as at end September 2005

Description % of Portfolio Geography Commodity

1 CVRD 10.6 Brazil Diversified2 BHP Limited 9.1 Global Diversified3 Rio Tinto Plc 8.3 Global Diversified4 Xstrata Plc 5.7 Global Diversified5 Impala Platinum Holdings Limited 5.3 South Africa Platinum6 Falconbridge Limited 4.8 Nth America Nickel7 Anglo American Inc 4.6 Global Diversified8 Minas Buenaventura 4.5 Peru Gold9 Alumina Limited 3.9 Australia Alumina

10 Teck Cominco Limited 2.9 Nth America DiversifiedTotal: 59.6

59.7

32

GMI Ltd - Asset Allocation

Source: Internal as at 30 September 2005

GMI v HSBC Global Mining Index Commodity Allocation September 2005

0%

10%

20%

30%

40%

50%

Div

ersi

fied

Gol

d

Alum

iniu

m

Cop

per

Plat

inum

Indu

stria

lM

iner

als

Zinc

Coa

l

Dia

mon

ds

Silv

er

Ura

nium

Nic

kel

Oth

er

Cas

h

Global Mining Investments

HSBC Global Mining Index