DIAMOND INTELLIGENCE BRIEFS

',$021',17(//,*(1&(%5,()6
$&RQÀGHQWLDO
6HUYLFHIRU
([HFXWLYHVLQ
WKH'LDPRQG
DQG'LDPRQG
-HZHOU\
%XVLQHVV
)HEUXDU\_9RO1R
%\&KDLP(YHQ=RKDU
0DUDQJH7HQGHUV
7DNLQJ2IILQD%LJ:D\
,WZDVDPKHUHLQ:DVKLQJWRQ'&\HVWHUGD\ZKHQDSKRQHFDOOIURP+DUDUHPDGHPHMXPS²DQG,NQHZWKH
QLJKWZDVRYHU$%HOJLDQWUDGHUVDLGWKDWKHLVDWWHQGLQJDURXJKWHQGHUE\WKH'LDPRQG0LQLQJ&RPSDQ\'0&ZKLFK
LVFXUUHQWO\WHQGHULQJVRPHFDUDWV'0&LVDUHLQFDUQDWLRQRIZKDWRQFHZDVFDOOHG3XUH'LDPRQGV²WKHQDPH
RIDQDVVRFLDWHGGLDPRQGWUDGLQJFRPSDQ\LQ'XEDL,WLVDMRLQWYHQWXUHZLWKWKHJRYHUQPHQWRZQHG=LPEDEZH0LQLQJ
'HYHORSPHQW&RPSDQ\=0'&
$QRWKHU.3&RPSOLDQW0LQH"
7KHWUDGHUSRVHGDQXUJHQWTXHVWLRQUHJDUGLQJWKHPLQH·V.3
FRPSOLDQFH'0&SHRSOHFODLPWKDWWKH\ZLOOKDYHD.LPEHUOH\
3URFHVV&HUWLÀFDWLRQ6FKHPH.3FHUWLÀFDWHQRODWHUWKDQ)HEUXDU\
WK²WKHFORVLQJGDWHRIWKHWHQGHU²DQGWKH\DUHVHOOLQJQRZVRWKDW
WKH\FDQJHWWKHLUUHYHQXHVWUHDPVWDUWHGULJKWDZD\
,GURSSHGDOLQHWR6WpSKDQH&KDUGRQWKH&KDLURIWKH.3·V
:RUNLQJ*URXSRQ0RQLWRULQJ:*0DVNLQJKLPLIWKHUHLVDQRWKHU
.3FRPSOLDQWPLQHLQ0DUDQJHWKDWZHGRQ·WNQRZDERXW+LVDQVZHU
ZDV´\HVµ²WKHUHLV
´7KH.30RQLWRUVYLVLWHG'0&DQGIRXQGLWWREHFRPSOLDQWµ
VDLG&KDUGRQ´7KLVZDVGLVFXVVHGE\:*0RQ-DQXDU\DQGQR
REMHFWLRQVZHUHUDLVHGVRLWVHHPVWREH¶NRVKHU·7KH.30RQLWRUV
ZHUHVFKHGXOHGWRFRQGXFWDQRWKHUYLVLWRQWKHRFFDVLRQRIWKH
ÀUVWH[SRUWµKHDGGHGWKXVFRQÀUPLQJWKHUHSRUWE\WKHWUDGHUWKDW
0RQLWRU$EEH\&KLNDQHZRXOGEHWKHUHWKLVZHHN
'0&FODLPVWKDWLWKDVEHHQPLQLQJIRUVRPHÀYHPRQWKVLWV
&251(562)7+(*/2%(„%5,()/<127('
',**,1*7+(',57„2))7+(6+(/)
6WpSKDQH
&KDUGRQ
$EEH\
&KLNDQH
(',725,$/
UHODWLYHO\PRGHVWDOOXYLDOPLQLQJRSHUDWLRQSURGXFHVVRPH
FDUDWVSHUGD\ZKLFKDW86SFZRXOGEHZRUWKDQHVWLPDWHG
867KDW·VDERXW86D\HDU7KDW·VDWOHDVW
DQRWKHUPLOOLRQFDUDWVRISUHGRPLQDQWO\FKHDSHUJRRGV
HQWHULQJWKHGLDPRQGEXVLQHVVRQWKHVXSSO\VLGH²DVVXPLQJ
WKDWWKLVOHYHORISURGXFWLRQLVPDLQWDLQHG7KDW·VSUREDEO\D
ZURQJDVVXPSWLRQDVWKHRXWSXWZLOOEHPRUHDVPHFKDQLFDO
FDSDFLW\LVHQKDQFHGDQGLPSURYHG'0&LVPDQDJHGE\9LF
%RWKDDQG*LOOH6LWKROH7KHUHLVDFRQVLGHUDEOHLQYROYHPHQWRI
,QGLDQVDQG/HEDQHVH
$/HYHO3OD\LQJ)LHOG
7KHKDUGO\QRWLFHGHQWU\RI'0&LQWRWKHLQGXVWU\DVD.3
FRPSOLDQWPLQHUDLVHVDQXPEHURITXHVWLRQV7KRXJKRQHPLJKW
DUJXHWKDW0DUDQJHKDVFHDVHGWREHDQLVVXHWKDWLWKDVEHFRPH
MXVWDPDWWHURIURXWLQHDQGWKDWWKHUHLVQRQHHGWRDQQRXQFH
VXFKHQWU\WRWKHLQGXVWU\DWODUJHRQHPLJKWDOVRDUJXHWRWKH
FRQWUDU\6LQJOHDQGVSHFLÀFPLQHFHUWLÀFDWLRQUHPDLQVDQRGGLW\
DQGLVTXLWHFRQWUDU\WRWKHZD\WKH.3V\VWHPZRUNVZKHUHRQO\
FRXQWULHVDUHFRQVLGHUHGFRPSOLDQWRUQRWFRPSOLDQWDQG´QHZ
PLQHVµDUHWKHUHIRUHQHLWKHU.3UHODWHGQRUQRWLFHDEOHHYHQWV
%XWZHVHHLWDVDPDWWHURIPDLQWDLQLQJDOHYHOSOD\LQJ
ÀHOG²RIIDLUFRPSHWLWLRQ+RZFDQRQHFRPSHWHLQD0DUDQJH
WHQGHULIWKHUHKDVQ·WEHHQDQ\SXEOLFQRWLFHRIWKH.3DSSURYDO
RIDQRWKHUPLQH"
=LPEDEZH
V'0&2SHUDWLRQV3KRWRIURPWKH=LPEDEZH*XDUGLDQ
0DUDQJH'LDPRQG$UHD
WKH&KLQHVHRZQHG$QMLQPLQHZLOOVHOOVRPHFDUDWV
DQG0DUDQJH5HVRXUFHVZLOOVHOOVRPHFDUDWV0EDGD
LVDOVRKDYLQJDVDOHEXW,DPQRWDZDUHRIKRZPXFKWKH\DUH
RIIHULQJWKRXJK,ZRXOGDVVXPHWKDWLWZRXOGQ·WEHOHVVWKDQ
FDUDWV
1RWDOOVDOHVZLOOQHHG.3FHUWLÀFDWHVDVLQ+DUDUHWKHUHDUH
RVWHQVLEO\DIHZGLDPRQGPDQXIDFWXULQJXQLWVHPSOR\LQJVRPH
FXWWHUVDOWRJHWKHU7KLVGRHVQ·WPHDQWKDWWKHJRRGVDUHQ·W
H[SRUWHG²EXWZHZRXOGQ·WNQRZ
0\EDFNRIWKHHQYHORSHFDOFXODWLRQVVKRZPLOOLRQ
FDUDWVIRUVDOHLQWKHQH[WZHHNV$W86SFWKDWLVQ·W´WRR
PXFKµPRQH\86PLOOLRQWR86PLOOLRQEXWRQO\SHUFHQW
RIWKHVHFDUDWVZLOOEHJHPTXDOLW\DQGWKHUHVWZLOOEHFKHDSHU
JRRGVIRUZKLFKWKHUHLVSUHVHQWO\OLWWOHDSSHWLWH%RWK'0&
DQG$QMLQVHOOIURPLQYHQWRULHVDFFXPXODWHGRYHUSHULRGVZKHQ
WKH\ZHUHGHQLHG.3FHUWLÀFDWHV3ULFHVDUHERXQGWREHXQGHU
HQRUPRXVSUHVVXUHV²ZLWKDVSLOORYHUHIIHFWRQWKHUHVWRIWKH
GLDPRQGPDUNHW0RUHRQWKLVODWHU
&RXULHU&RPSDQLHV
)HEUXDU\0DUDQJH7HQGHUV
0LOOLRQ&DUDWV"
,WLVFURZGHGLQWKH0HLNOHV+RWHOLQ+DUDUH²DWOHDVWIURP
DGLDPRQGSHUVSHFWLYH,QWKHQH[WRQHWRGD\VZH·OOVHH
VRPHRIWKHFKDOOHQJLQJRUPD\EH´IULJKWHQLQJµLVDEHWWHU
ZRUGVFHQDULRVXQIROG²IURPDQLQGXVWU\SULFLQJSHUVSHFWLYH
'0&LVWHQGHULQJPRUHWKDQFDUDWVPHDQZKLOH
$VZHUHSRUWHGSUHYLRXVO\QRQHRIWKHXVXDOFRXULHUFRPSDQLHV
%ULQNV0DOFD$PLWHWFZLOOWDNHJRRGVLQ+DUDUH²EHFDXVH
WKHVH0DUDQJHPLQHVDUHXQGHU862)$&VDQFWLRQVDJDLQVW
=LPEDEZH'0&PD\QRWEHOLVWHG\HWSHUVHEXWLWVSHUFHQW
VKDUHKROGHU=0'&LV²DQGWKDW·VHQRXJKIRUVDQFWLRQVWRDSSO\
7KHUHIRUHHDFKDQGHYHU\EX\HUKDVGHYHORSHGKLVRZQ
´WUDQVSRUWDWLRQDUUDQJHPHQWµ²PRVWO\E\SDVVHQJHURQWKH
(WKLRSLDQ$LUOLQH·VFRQYHQLHQWEXWQLJKWPDULVKLQWHUPVRIVHDWLQJ
FRPIRUW+DUDUH7HO$YLYÁLJKWV7KHPDMRULW\RISDUFHOVZRXOG
EHERDUGHGLQ-RKDQQHVEXUJ2)$&RUQR2)$&WKHURXJK
GLDPRQGVGRJRRXW²DQGWKHUHVXOWDQWSROLVKHGÀQGVLWVZD\
WRWKH8QLWHG6WDWHVRUPRUHSUHFLVHO\PRVWO\WRWKH8QLWHG
6WDWHVZKLFKLVWKHSUHIHUUHGGHVWLQDWLRQIRUPRVWRIWKHZRUOG·V
FKHDSGLDPRQGSURGXFWLRQ)URPDGLDPRQGSHUVSHFWLYHLW
LVRXUEHVW´MXQNPDUNHWµ
',$021',17(//,*(1&(%5,()6
(',725,$/
7KH0DUDQJH0DUNHW
,QVSLWHRIWKHFRQVLGHUDEOHVLPLODULWLHVDPRQJWKHIRXUFXUUHQWO\
RSHUDWLQJGLDPRQGPLQHVLQ0DUDQJH²WKHÀIWKRQH6LQR=LP
KDVVXVSHQGHGRSHUDWLRQVDVLWIRXQGWKDWWKHFRQFHVVLRQZDVQ·W
SURÀWDEOH²WKHUHDUHQHYHUWKHOHVVFRQVLGHUDEOHGLIIHUHQFHV7KH
QRUWKHUQPLQHV0EDGDZRXOG\LHOGDYHUDJHVL]HGLDPRQGVRI
FDUDWV0DUDQJH5HVRXUFHVFDUDWVDQG$QMLQVRPHFDUDWV
$VIRU'0&ZHVWLOOGRQ·WNQRZ
&OHDUO\WKHÀUVWWHQGHUE\$QMLQPD\QRWUHSUHVHQW´UXQRI
PLQHµ7UDGHUVVD\WKDWWKHFRPSDQ\VROGVRPHFDUDWV
RIZKLFKSHUFHQWE\YROXPHFRQVLVWHGRIODUJHUJRRGVIURP
FDUDWVHDFKWRFDUDWV,QWHUPVRIYDOXHWKLVSHUFHQWZRXOG
KDYHUHSUHVHQWHGSHUFHQWRIWRWDOYDOXHLQDWHQGHUWKDW
\LHOGHGVRPH86PLOOLRQSOXVDWDQDYHUDJHSULFHRIVOLJKWO\
EHORZ86SF
:KHQ WKH 0DUDQJH VXSSO\ H[SDQGV DQG WKH GHPDQG
IRUFKHDSURXJKLVWXUQLQJVRXWKZDUGWKHSULFHVDUHXQGHU
FRQVLGHUDEOHSUHVVXUH7KHSHDNRIZHOODERYH86SFIRU
UXQRIPLQHSURGXFWLRQVKDVFOHDUO\SDVVHG%LGSULFHVDUHQRW
QHFHVVDULO\UHSUHVHQWDWLYH
´0RVWEX\HUVDWWHQGPXOWLSOHWHQGHUVµVD\VRQHWUDGHU´,Q
WKHFXUUHQWPDUNHWZHORRNIRUEDUJDLQV:H·OOSDUWLFLSDWHDW
YDULRXVWHQGHUVEXWZLOOFRPHLQDWORZSULFHV6RLIZHZLQD
IHZORWVZHDUHERXQGWRPDNHPRQH\µKHDGGHG%DUJDLQ
KXQWHUVDQGVSHFXODWLYHEX\LQJDUHWKHZRUGVWKDWFRPHÀUVW
WRPLQGIRUWKH0DUDQJHPDUNHW
$FFRUGLQJWRWKHV\VWHPERWKWKH00&=DQGWKHLQGLYLGXDO
PLQHVHWD´UHVHUYHSULFHµ²DQGWKHKLJKHURIWKHWZRZLOOEH
XVHGDWWKHWHQGHU
5HFHQWO\ZHKDYHVHHQWKDWLQPDQ\LQVWDQFHVQHJRWLDWLRQV
FRQWLQXHGZKHQHYHUWKHKLJKHVWELGGLGQ·WPHHWWKHUHVHUYH
SULFH²WKXVWHQGHUVKDYHEHFRPHPRUHRIDSURORQJHGH[HUFLVH
6WHDG\&OLHQW%DVH
7KRXJKPDQ\0DUDQJHEX\HUVZLOOXVHDYDULHW\RIFRUSRUDWH
HQWLWLHV´VWUDZFRPSDQLHVµWRSDUWLFLSDWHLQWHQGHUVWKHUHDUH
QRZVRPHWZRGR]HQSDUWLHVZKRVHQDPHVDSSHDUZLWKJUHDW
IUHTXHQF\LQPRVWWHQGHUV
$FWXDOO\WKHUHDUHDOVRVRPH'7&VLJKWKROGHUVWKDWSDUWLFLSDWH
LQWKHWHQGHUV7KLVLVTXLWHLQWHUHVWLQJVLQFHDSSDUHQWO\IRU'H
%HHUVLWLVLPSRUWDQWWKDWWKHVXSSOLHUEH.3FRPSOLDQW²DQG
WKHIDFWWKDW2)$&SURKLELWVWKH´GLUHFWRULQGLUHFWLPSRUWVµRI
WKHVHJRRGVLQWRWKH8QLWHG6WDWHVLVRIQRFRQFHUQWRWKH'7&
=LPEDEZH3URGXFWLRQ6FHQDULRV
6RUWLQJ
0DUDQJH
5RXJKLQ
+DUDUH
,QWHUPVRIYDOXDWLRQVWKHH[SHUWVDWWKH0LQHUDO0DUNHWLQJ
&RUSRUDWLRQRI=LPEDEZH00&=ZKLFKE\ODZDGPLQLVWHUV
DOOWHQGHUVDQGLVWKH´VHOOLQJSDUW\µRQEHKDOIRIWKHLQGLYLGXDO
SURGXFHUVKDYHE\QRZWKHEHVW´IHHOLQJµIRUWKHJRRGV²DQG
WKHLUUHVHUYHSULFHWHQGVWREHTXLWHFORVHWRWKHKLJKHVWELGGHU
$IHZ\HDUVDJRWRJHWKHUZLWK3UDQD\1DUYHNDURI0XPEDL
EDVHG3KDURV%HDPZHGHYHORSHGVRPHIXWXUH=LPEDEZH
VFHQDULRVDQGDVZHPRYHIRUZDUGLQWLPHRXUSUHGLFWLRQV
VHHPWRWDNHÀUPHUVKDSHDQGDUH
3UDQD\
YDOLGDWHG=LPEDEZHVHHPVZHOORQ
1DUYHNDU
LWVZD\WRSRWHQWLDOO\VXSSO\LQJ
SHUFHQWRIWKHZRUOGVXSSO\E\YDOXH
DQGSHUFHQWE\YROXPHPLOOLRQ
FDUDWVRXWRIPLOOLRQE\
0DUDQJH·V WRWDO SRWHQWLDO
SURVSHFWLQJDUHDLVKHFWDUHV
NP2IWKLVSHUFHQWKDV
DOUHDG\EHHQLGHQWLÀHGDVKDYLQJ
HFRQRPLF SRWHQWLDO 2QH FDQ
DVVXPHDWRWDORISHUFHQWLH
KHFWDUHV NP WR EH
PLQHDEOH&RQFHVVLRQ DUHDV DUH
',$021',17(//,*(1&(%5,()6
(',725,$/
URXJKO\KHFWDUHSHUOLFHQVH0DUDQJHKDVDSRWHQWLDO
IRUPLQHV
,IHDFKHFRQRPLFSURSHUW\ZLOOPLQHDPLQLPXPRIPLOOLRQ
FDUDWVD\HDU²ZKLFKVRIDULVFOHDUO\WKHFDVH²WRWDODQQXDO
SURGXFWLRQPD\XOWLPDWHO\UHDFKPLOOLRQFDUDWVD\HDU
²ZKLFKZRXOGEHPRUHWKDQWKHFXUUHQWJOREDOURXJKRXWSXW
:HHVWLPDWHGWKDWWKHDYHUDJHGLDPRQGVL]HRIFXUUHQW
SURGXFWLRQLVFDUDWVZKLFKLIDQ\WKLQJPD\WXUQRXWWREHWRR
ORZ%XWZHGRQ·W\HWNQRZZKDWIXWXUHPLQHVZLOO\LHOG6RPH
SHUFHQWRIWKHFXUUHQWO\NQRZQ0DUDQJHPLQLQJRXWSXWLV
FXWWDEOHFRPSDUHGWRSHUFHQWRIDYHUDJHZRUOGRXWSXW
2IWKHFXWWDEOHTXDQWLWLHVVRPHSHUFHQWLVRIJHPTXDOLW\
ZKLFKKDVDSROLVKHG\LHOGLQWKHSHUFHQWUDQJHZKLOH
WKHUHPDLQLQJSHUFHQWFRQVLVWVRIQHDUJHPTXDOLW\ZKLFK
KDVDSROLVKHG\LHOGRIEHWZHHQSHUFHQW
&XUUHQWSURGXFWLRQLVYHU\FRQVHUYDWLYHO\YDOXHGDWEHWZHHQ
8686ELOOLRQD\HDUPD\EHPRUHEXWQRWOHVV
SHRSOHLQFOHDYLQJDQGVRPHSHRSOHLQPDUNLQJ$QDYHUDJH
RISROLVKHGVWRQHVFDQEHSURGXFHGSHUFDUDW²WKXVDQQXDOO\
VRPHPLOOLRQSROLVKHGVWRQHVZLOOFRPHRXWRIWKHSURGXFWLRQ
,Q,QGLDVWRQHVRI0DUDQJHW\SHURXJKDUHSROLVKHGSHU
ZRUNHUSHU\HDUµVD\V1DUYHNDU
7KHERWWRPOLQHLVWKDW0DUDQJH·VFXUUHQWSURGXFWLRQZLOO
FRQWULEXWHGLUHFWHPSOR\PHQWIRUZRUNHUVDQGLQGLUHFW
HPSOR\PHQWVXSHUYLVRU\DVVRUWPHQWPDUNHWLQJDGPLQLVWUDWLRQ
HWFRIMREV0DUDQJHGLDPRQGVZLOOSURYLGH
GLUHFWDQGLQGLUHFWMREVLQGRZQVWUHDPSURFHVVLQJ
0DUNHWLQJ,PSOLFDWLRQV
,PSDFWRQ&XWWLQJ&HQWHUV
,W·VNLQGRIHXSKHPLVWLFWRUHIHUWR´LPSDFWRQFXWWLQJFHQWHUVµ
DVLQIDFWRQO\,QGLDLVDIIHFWHGLQDPRVWVHULRXVZD\,QGLD·V
FXWWLQJLQGXVWU\VXIIHUVSUHVHQWO\IURPDVKRUWDJHRIODERU,W
FOHDUO\FDQQRWKDQGOHWKHJURZLQJLQÁRZRI0DUDQJHJRRGV²
DQGSURFHVVLQJZLOOFRPHDWWKHH[SHQVHRIURXJKIURPRWKHU
SURGXFHUVHVSHFLDOO\$UJ\OH
$FFRUGLQJWR3UDQD\1DUYHNDU´DWPLOOLRQFDUDWVURXJK
FXWWDEOHD\HDUPDQSRZHUUHTXLUHPHQWVZRXOGEHIRU
7KHHYROYLQJ0DUDQJHVWRU\GRHVQ·WUHDOO\FRQWDLQVXUSULVHV
,WUHPDLQVDUHDOWKUHDWWR$UJ\OH·VXQGHUJURXQGRSHUDWLRQVDV
0DUDQJHZLOOVWURQJO\FRPSHWHZLWKWKHVHJRRGVZKHQWKH\
FRPHRQVWUHDPLQDPDMRUZD\WRZDUGVWKHHQGRIWKH\HDU
,WKDVWUHPHQGRXVPDUNHWLQJLPSOLFDWLRQVZKHUHE\$UJ\OH·V5LR
7LQWRZLOOHQGHDYRUWR´GLIIHUHQWLDWHµLQWKHPDUNHWV²´JRRG
JRRGVµIRUZKLFKFRQVXPHUVZLOOSD\SUHPLXPVYHUVHV´WDLQWHG
JRRGVµZKLFKZLOOWUDGHDWDPDUNHWGLVFRXQW,GRQ·WOLNHWKHVH
GLIIHUHQWLDWLRQV²EXWHDFKSURGXFHULVHQWLWOHGWRKDYHLWVRZQ
VWUDWHJLHVSODQVRUYLVLRQV
$ORWRIDVVXPSWLRQVDUHDOZD\VPDGHDERXW´ZKDWWKH
FRQVXPHUZDQWVµ1RERG\UHDOO\ZDQWVWRVSHOORXWWKHHPSLULFDOO\
SURYHQWUXWKWKHFRQVXPHUGRHVQ·WFDUH$IRUPHUORQJWLPH
OHJDOGLUHFWRURI'H%HHUVRQFHH[SODLQHGWRPHWKDW´QRWKLQJ
ZLOOFRPHEHWZHHQDZRPDQDQGKHUGLDPRQGµ
'LDPRQGVZLOOVHOO²EXWWKH=LPEDEZHGLDPRQGPLQHUV
PD\ZLVKWRFRQVLGHUZLWKJUHDWHUFDUHWKHWLPLQJRIEULQJLQJ
DGGLWLRQDOPLQHVLQWRRSHUDWLRQ7KHGLDPRQGVWKHUHKDYHEHHQ
GHHSXQGHU=LPEDEZH·VJURXQGIRUPRUHWKDQRQHELOOLRQ\HDUV
$IHZPRUH\HDUVEHIRUHFRPLQJLQWRWKLVZRUOGZLOOQRWKXUW
DQ\ERG\7RWKHFRQWUDU\ʕ
',$021',17(//,*(1&(%5,()6
,QGLDQ,QLWLDWLYHWR7UDLQ7ULEDO:RPHQ
LQ'LDPRQG0DQXIDFWXULQJ
,1',$
,QDVLPXOWDQHRXVHIIRUWWRERRVWHPSOR\PHQWDPRQJ,QGLD·VXQVNLOOHGWULEDO
ZRPDQDQGFRUUHFWWKHVKRUWDJHRI,QGLD·VWUDLQHGGLDPRQGZRUNHUVWKH*HPV
DQG-HZHOOHU\([SRUW3URPRWLRQ&RXQFLO*-(3&6XUDW'LDPRQG$VVRFLDWLRQ
6'$DQG'LVWULFW5XUDO'HYHORSPHQW$JHQF\'5'$KDYHUHSRUWHGO\IRUPHGDMRLQW
LQLWLDWLYHWRWUDLQXQVNLOOHGWULEDOZRPHQLQGLDPRQGFXWWLQJDQGSROLVKLQJ
7KH'5'$ZKLFKLVUXQQLQJZRPHQHPSRZHUPHQWVFKHPHVDQGSURJUDPVLQ
UXUDODUHDVKDVDERXW6HOI+HOS*URXSV6+*V
FRQVLVWLQJRIPRUHWKDQZRPHQDVLWVPHPEHUV
IURPGLIIHUHQWYLOODJHVDOORIZKRPZLOOEHRIIHUHG
WUDLQLQJIRUGLDPRQGFXWWLQJDQGSROLVKLQJDFFRUGLQJ
WRWKH7LPHVRI,QGLD
7KHQHZVVRXUFHVD\VWKDWWKH,QGLDQ'LDPRQG
,QVWLWXWH,',KDVWDNHQUHVSRQVLELOLW\IRUWUDLQLQJWKH
WULEDOZRPHQ2QFHWKHLUWUDLQLQJLVFRPSOHWHGWKH
6'$DQGWKH*-(3&ZLOOUHSRUWHGO\XUJHGLDPDQWDLUHV
WRHVWDEOLVKVPDOOGLDPRQGFXWWLQJDQGSROLVKLQJXQLWV
LQRXWO\LQJDUHDVWRHPSOR\WKHQHZO\VNLOOHGZRPHQ
´7KHLQGXVWU\LVVHWWRIDFHDVKRUWDJHRIGLDPRQG
ZRUNHUVLQWKHQHDUIXWXUHDVWKH\RXQJVWHUVDUHQRW
ZLOOLQJWRWDNHXSWKHMREDQGWKHSUHVHQWZRUNIRUFH
LVRQWKHYHUJHRIUHWLUHPHQW+RZHYHUWKHLQGXVWU\
KDVIHOWDVWURQJQHHGWRWUDLQXQVNLOOHGDUWLVDQVIURP
WKHUXUDODUHDVWRFUHDWHPRUHHPSOR\PHQW:HDUH
UHDG\WRH[WHQGDOOWKHVXSSRUWUHTXLUHGLQWUDLQLQJ
DQGJLYLQJHPSOR\PHQWWRWKHWULEDOZRPHQDWWKHLU
GRRUVWHSµVD\V6'$3UHVLGHQW'LQHVK1DYDGLDDV
TXRWHGE\WKH7LPHVRI,QGLD
,QGLDQ*RYHUQPHQW0XOOV'LDPRQG+DOOPDUNLQJ
,QGLDPD\EHSODQQLQJWRLPSOHPHQWDKDOOPDUNLQJPHFKDQLVPIRUGLDPRQGV
DFFRUGLQJWRWKH,QGLDQ([SUHVVZKLFKUHSRUWVWKDWWKH´WULJJHUµIRUWKHSURSRVDO
ZDVWKHFXVWRPVGHSDUWPHQW
VLPSRVLWLRQRIDQLPSRUWGXW\RISHUFHQWRQERWK
ODEJURZQGLDPRQGVDQGQDWXUDOSROLVKHGGLDPRQGV
:LWKWKLVXQQDPHGLQGXVWU\VRXUFHVVD\WKH\IHDUWKHFRXQWU\PLJKWVHHDELJLQÁRZ
RIODEJURZQGLDPRQGVZKLFKKLWKHUWRKDGDQLPSRUWGXW\RISHUFHQW7KHQHZV
UHSRUWDOVRQRWHVWKDWWKHUHLVULVLQJFRQFHUQWKDWFRQVXPHUVFRXOGEHXQNQRZLQJO\
GXSHGLQWREX\LQJODEJURZQGLDPRQGVWKDWWKH\WKLQNDUHQDWXUDOSROLVKHGGLDPRQGV
*LYHQWKHIDFWWKDWODEJURZQGLDPRQGVFRVWSHUFHQWOHVVWKDQWKHQDWXUDO
RQHVLWLVWKHMHZHOHUVZKRDUHJRLQJWREHQHÀWWKHPRVWUHSRUWVWKHQHZVVRXUFH
FLWLQJXQQDPHGH[SHUWV
´,WLVQRWJRRGIRUFXVWRPHUV7KHUHPXVWEHVRPHFHUWLÀFDWLRQOLNHWKHRQHIRUJROG
,QIDFWLWVKRXOGKDYHDVHSDUDWHGXW\VWUXFWXUHDQGWDULIIFRGH,QGLD·VVWUHQJWKOLHV
LQQDWXUDOGLDPRQGVDQGZHKDYHQRFRPSHWHQFHLQODEJURZQGLDPRQGVµUHSRUWV
,QGLDQ([SUHVVTXRWLQJDQXQQDPHG*HPDQG-HZHOOHU\([SRUW3URPRWLRQ&RXQFLO
*-(3&RIÀFLDO
7KHRIÀFLDODGGHGWKDWWKHJRYHUQPHQWVKRXOGÀUVWIRFXVRQHVWDEOLVKLQJODERUDWRULHV
IRULQGXVWULDOGLDPRQGVDVFXUUHQWO\WKHUHLVQRIDFLOLW\IRUWHVWLQJWKHODEJURZQGLDPRQGV
ZKLFKDUHDOVRXVHGIRUPDNLQJMHZHOU\DFFRUGLQJWRWKHQHZVVRXUFH
81,7('67$7(6
,1',$
&251(562)7+(*/2%(
86$SSRLQWV
*LOOLDQ0LORYDQRYLF
DV.3&KDLU
+DYLQJDVVXPHGWKHURWDWLQJ
&KDLUPDQVKLS RI WKH .LPEHUO\
3URFHVV&HUWLÀFDWLRQ6FKHPH.3IRU
WKH8QLWHG6WDWHVKDVQDPHG
$PEDVVDGRU*LOOLDQ0LORYDQRYLFDV
WKHJURXS·V&KDLUZRPDQ6KHLVWKH
ÀUVWZRPDQWRKHDGWKHRUJDQL]DWLRQ
$PEDVVDGRU0LORYDQRYLFSUHYLRXVO\
VHUYHGDV86DPEDVVDGRUWR0DOLDQGWR
0DFHGRQLDDQGKDVKHOGVHQLRUSRVLWLRQV
DW86HPEDVVLHVLQ6RXWK$IULFD%RWVZDQD
DQG%HOJLXP$PEDVVDGRU0LORYDQRYLF
VSHDNVÁXHQW)UHQFKDQGKDVH[WHQVLYH
HFRQRPLFDQGEXVLQHVVH[SHULHQFH
´, DP FRQÀGHQW WKDW WKURXJK KHU
OHDGHUVKLS ZH FDQ ZRUN WRJHWKHU WR
HIIHFWLYHO\ DGGUHVV WKH FRQFHUQV RI
YDULRXVVWDNHKROGHUVWRLPSURYHWKH.3µ
VD\V$VVLVWDQW6HFUHWDU\IRU(FRQRPLFDQG
%XVLQHVV$IIDLUV-RVH:)HUQDQGH]LQDOHWWHU
DQQRXQFLQJKHUDSSRLQWPHQW
$FFRUGLQJ WR )HUQDQGH] ZKR
FRQÀUPHGKLVFRQWLQXHGLQYROYHPHQWLQWKH
.3WKURXJKRXWWKH\HDUHVSHFLDOO\DWWKLV
\HDU
V,QWHUVHVVLRQDODQG3OHQDU\PHHWLQJV
WKH86DLPIRUWKLV\HDULVWR´QXUWXUHD
FXOWXUHRIFRQVXOWDWLRQFROODERUDWLRQDQG
WUDQVSDUHQF\LQWKH.3µZKLOHPHHWLQJ
FXUUHQWDQGIXWXUHFKDOOHQJHV
6RXWK$IULFDLVVHUYLQJDORQJVLGHWKH
86WKLV\HDUDVWKH.39LFH&KDLU
*LOOLDQ
0LORYDQRYLF
',$021',17(//,*(1&(%5,()6
'7&+RQRUV2SSHQKHLPHUVGXULQJ
$QQXDO6LJKWKROGHU&RFNWDLO5HFHSWLRQ
7KH'LDPRQG7UDGLQJ&RPSDQ\'7&FHOHEUDWHGWKHVWDUWRIWKHVDOHV
\HDUODVWZHHNDWLWVDQQXDO&KDLUPDQ·V&RFNWDLO5HFHSWLRQLQ/RQGRQ'H%HHUV
*URXS&KDLUPDQ1LFN\2SSHQKHLPHUDQG'7&&KLHI([HFXWLYH2IÀFHU9DUGD
6KLQHKRVWHGWKHHYHQWIRU'7&VLJKWKROGHUV$OVRLQDWWHQGDQFHZHUH$QJOR
$PHULFDQ&KLHI([HFXWLYH&\QWKLD&DUUROODQG'H%HHUV*URXS&KLHI([HFXWLYH
2IÀFHU3KLOLSSH0HOOLHU
6:$=,/$1'
(1*/$1'
&251(562)7+(*/2%(
'YRNROZDNR7LJKWHQV
6HFXULW\DPLG5HSRUWV
RI'LDPRQG/RRWLQJ
6HFXULW\KDVEHHQWLJKWHQHGDW
6ZD]LODQG·V'YRNROZDNR'LDPRQG
0LQH IROORZLQJ PHGLD UHSRUWV
UHYHDOLQJ JURZLQJ LQVWDQFHV RI
ORFDOWUHVSDVVHUVLOOHJDOO\ORRWLQJ
DQGVHOOLQJWKHPLQH·VGLDPRQGV
7ULEXWHWRWKH2SSHQKHLPHUV
7KH6ZD]L2EVHUYHUUHSRUWVWKDWLQWKH
3D\LQJWULEXWHWRWKH2SSHQKHLPHUV·ORQJDVVRFLDWLRQZLWK'H%HHUVDQGGLDPRQGV SDVWZHHNWKHPLQH·VVHFXULW\SHUVRQQHO
&\QWKLD&DUUROODGGUHVVHGWKHSDUW\E\VD\LQJ´7KHFRQWULEXWLRQWKH2SSHQKHLPHU KDYHVWDUWHGFRQGXFWLQJ´UHJXODUDQG
IDPLO\KDVPDGHZLOODOZD\VUHPDLQDWWKHKHDUWRI'H%HHUVMXVWDVLWZLOOUHPDLQDWWKH VWULQJHQWµSDWUROVGXULQJWKHGD\DQGDW
KHDUWRI$QJOR$PHULFDQZKLFKZDVLWVHOIIRXQGHGE\1LFN\·V*UDQGIDWKHU6LU(UQHVW QLJKWSURKLELWLQJORFDOVDQ\DFFHVVWR
2SSHQKHLPHU$QJOR$PHULFDQDQG'H%HHUVKDYHD
WKHPLQH6RXUFHVWROGWKH
VKDUHGKLVWRU\DQGVKDUHGYDOXHVµ
QHZVSDSHUWKDWWKHVWROHQ
$GGHG&DUUROO´DWWKHKHDUWRI'H%HHUV·FRPPLWPHQW
GLDPRQGVZHUHVROGRQWKH
WRSDUWQHUVKLSLVRXUUHODWLRQVKLSZLWKVLJKWKROGHUV$VWKH
EODFNPDUNHWLQ6RXWK$IULFD
ZRUOG·VOHDGLQJGLDPDQWDLUHVVLJKWKROGHUVSOD\DFULWLFDO
PRVWO\WR$VLDQQDWLRQDOV
UROHLQWKHVXFFHVVRI'H%HHUVDQGWKHGHYHORSPHQWRI
2SHUDWLRQVDWWKHPLQH
WKHGLDPRQGPDUNHW,ÀUPO\EHOLHYHWKDWWKHXQLTXH
KDYHQRW\HWFRPPHQFHG
VWUHQJWKVRI'H%HHUVDQGLWVVLJKWKROGHUVFRPELQHG
7KH PLQH·V RZQHU 6RXWK
ZLWKWKHVFDOHDQGUHVRXUFHVRIWKH$QJOR$PHULFDQ
$IULFDEDVHG PXOWL
*URXSFDQEULQJHYHQJUHDWHUIXWXUHVXFFHVV:HDUH
PLOOLRQDLUH5RX[6KDEDQJX
FRPPLWWHGWRRXUSDUWQHUVKLSZLWKVLJKWKROGHUVDQGWR
UHFHQWO\VDLGRQUHFRUGWKDW
ZRUNLQJWRJHWKHUWRPDNHWKDWIXWXUHDQH[FLWLQJUHDOLW\µ
KHZDVVWLOOFRPPLWWHGLQ
1LFN\2SSHQKHLPHU
:LWKODVWZHHN·V&KDLUPDQ·V&RFNWDLO5HFHSWLRQOLNHO\
SXUVXLQJWKH'YRNROZDNR
DGGUHVVLQJWKH
WREH1LFN\2SSHQKHLPHU·VODVWDVKLVIDPLO\SUHSDUHVWR
'LDPRQG 0LQH SURMHFW
&KDLUPDQ
V&RFNWDLO
5HFHSWLRQLQ/RQGRQ
H[LWWKH'H%HHUV*URXSKHH[SUHVVHGKLVJUDWLWXGHIRU
ZKLFKZDVFORVHGPRUHWKDQ
\HDUV DJR 6KDEDQJX
WKHWULEXWHVWRWKHUROHRIWKH2SSHQKHLPHUIDPLO\LQWKH
GLDPRQGLQGXVWU\´,FDQQRWGLVJXLVHWKDWWKLVLVDPRYLQJRFFDVLRQIRUPHSHUVRQDOO\ SURPLVHGWKDWWKHPLQHZRXOGUHRSHQ
EXW,DPSURXGRIWKHFRQWULEXWLRQP\IDPLO\KDVEHHQDEOHWRPDNHWRZKDW,EHOLHYHLV WKLV\HDUDQGWKDWPRUHWKDQSHRSOH
WKHPRVWH[FLWLQJLQGXVWU\LQWKHZRUOG,NQRZWKDWZLWKWKHVXSSRUWRI$QJOR$PHULFDQ ZRXOGEHHPSOR\HGDW'YRNROZDNRRQFH
DQGWKHFRPPLWPHQWRI3KLOLSSH0HOOLHU'H%HHUVRXUVLJKWKROGHUVDQGRXUSURGXFHU LWVWDUWHGRSHUDWLQJDWIXOOFDSDFLW\
+HKDGVDLGWKHGHOD\LQRSHQLQJWKH
SDUWQHUVKDYHDULFKDQGUHZDUGLQJIXWXUHDKHDGRIWKHPµ
PLQHZDVFDXVHGE\WKHVHULHVRIWHVWVWKDW
$6XFFHVVIXO<HDUIRU6LJKWKROGHUV
KDGWREHFRQGXFWHG
9DUGD6KLQHDOVRVSRNHDWWKHUHFHSWLRQFRPPHQGLQJ'7&VLJKWKROGHUVIRUWKHLU
6ZD]LODQG UHFHLYHG DFFHSWDQFH
KDUGZRUNDQGFRPPLWPHQWGXULQJ´7KLVZDVXQGRXEWHGO\DVXFFHVVIXO\HDUIRU LQWRWKH.LPEHUOH\3URFHVV&HUWLÀFDWLRQ
WKHGLDPRQGLQGXVWU\DQG,ZDVKHDUWHQHGWRVHHVLJKWKROGHUVSHUIRUPVWURQJO\GHVSLWH 6FKHPHLQ
WKHFKDOOHQJHVZHDOOIDFHGµVDLG6KLQH´6LJKWKROGHUVDUHWKHOHDGHUVRIWKHGLDPRQG
LQGXVWU\:LWKWKLVFRPHVSULYLOHJHEXWDOVRWKHUHVSRQVLELOLW\WROHDGWKHZD\E\HQVXULQJ
ZHDUH¶XSWRGLDPRQGV·LQHYHU\WKLQJZHGR7RJHWKHUVLJKWKROGHUVSURGXFHUSDUWQHUV
DQGWKH'7&FUHDWHDIRUPLGDEOHWHDPRQHWKDWLVPRUHWKDQFDSDEOHRIIXOÀOOLQJWKH
SURPLVHRIWKH¶'LDPRQG'HFDGHµFRQFOXGHG6KLQH
,QKLVDGGUHVV3KLOLSSH0HOOLHUWKDQNHGWKH'7&DQGLWVVLJKWKROGHUVIRUWKHLUFRQWLQXLQJ
FRPPLWPHQWWRWKHVXFFHVVRIWKHGLDPRQGLQGXVWU\DQGUHPLQGHGDWWHQGHHVWKDW´DVQHZ
JHQHUDWLRQVFRPHRIDJHFDUU\LQJQHZFXOWXUDODQGOLIHH[SHULHQFHVDQGH[SHFWDWLRQV
ZHPXVWZRUNWRHQVXUHWKH\GLVFRYHUDSURGXFWZLWKGHHSPHDQLQJYDOXHDQGLQWHJULW\
5RX[
)URPH[SORUDWLRQDQGPLQLQJWRPDQXIDFWXULQJPDUNHWLQJDQGUHWDLOWKLVPXVWEHDMRLQHG
6KDEDQJX
XSHIIRUWWRGHOLYHURQRQHRIWKHZRUOG·VVWURQJHVWFRQVXPHUSURSRVLWLRQVµ
',$021',17(//,*(1&(%5,()6
=LPEDEZHWR6LJQLÀFDQWO\5DLVH0LQHUV·
5HJLVWUDWLRQ/LFHQVH)HHV
7KH=LPEDEZHJRYHUQPHQWLVUHSRUWHGO\SURSRVLQJWRUDLVHUHJLVWUDWLRQUHQWDO
DQGOLFHQVHIHHVIRUPLQLQJDFWLYLWLHVWRFDSLWDOL]HRQUHYHQXHVIURPWKHPLQLQJ
VHFWRUDQGWRGLVFRXUDJHWKHKROGLQJRIFODLPVIRUVSHFXODWLYHSXUSRVHV:KLOH
0LQHVDQG0LQLQJ'HYHORSPHQW3HUPDQHQW6HFUHWDU\3ULQFH0XSD]YLULKRFRQÀUPHG
WKDWQHZIHHVZRXOGEHDQQRXQFHGVRRQKHGHFOLQHGWRGLYXOJHZKHQUHSRUWV
WKHVWDWHUXQ+HUDOG
)RUGLDPRQGPLQHUVWKHSURVSHFWLQJIHHZLOOUHPDLQDW86PLOOLRQDOWKRXJKDRQH
RIIDQGQRQUHIXQGDEOHUHJLVWUDWLRQIHHRI86PLOOLRQZLOOEHLQWURGXFHGLIWKHSURSRVDOV
DUHDSSURYHGDFFRUGLQJWRWKHPLQLVWU\·VGUDIWVFKHGXOHDVFLWHGE\WKHQHZVVRXUFH
$GGLWLRQDOO\WKHOLFHQVHWRFXWDQGSROLVKGLDPRQGVZLOOUHSRUWHGO\ULVHWR86
IURP86ZKLOHDJROGEX\LQJOLFHQVHZLOOGRXEOHIURP86WR86
$QRUGLQDU\SURVSHFWLQJOLFHQVHIRUSODWLQXPZLOOULVHIURP86WR86
ZKLOHWKHUHJLVWUDWLRQIHHZLOOULVHIURP86WR86PLOOLRQQRWHVWKH+HUDOG7KRVH
PLQLQJFRDOFRDOEHGPHWKDQHJDVFKURPHPLQHUDORLOVQDWXUDOJDVDQGQXFOHDU
HQHUJ\PLQHUDOUHVRXUFHVZLOODOVRVHHVLJQLÀFDQWULVHVLQSURVSHFWLQJDQGUHJLVWUDWLRQIHHV
6RXUFHVVD\WKDWVPDOOVFDOHPLQHUVZLOOOLNHO\FHDVHRSHUDWLRQVLIVXFKIHHVDUHDGRSWHG
&KDLUPDQRIWKH3DUOLDPHQWDU\3RUWIROLR&RPPLWWHHRQ0LQHVDQG(QHUJ\&GH
(GZDUG&KLQGRUL&KLQLQJDWROGWKH+HUDOGWKDWWKHLQFUHDVHVZRXOGQRWEHLQWKHPLQLQJ
VHFWRU·VLQWHUHVWVLIWKH\ZHUHWREHJD]HWWHG
´/LFHQFHIHHVVKRXOGQRWEHXVHGDVDUHYHQXHJHQHUDWLQJLQVWUXPHQWEXWDQHQDEOLQJ
LQVWUXPHQW7KHUHVKRXOGEHRWKHUPHDVXUHVWRFRQWUROZKRFRPHVLQLQVWHDGRIUDLVLQJ
OLFHQFHV6RPHRIWKHÀJXUHVZHDUHKHDULQJDUHXQDIIRUGDEOHWR=LPEDEZHDQVµKH
VDLGDVTXRWHGE\WKHQHZVVRXUFH
$50(1,$
=,0%$%:(
&251(562)7+(*/2%(
6RXUFH$UPHQLD·V
5RXJK'LDPRQG
%X\VIURP$OURVD
+LJKHULQ
1LQH$UPHQLDQGLDPRQGPDQX
IDFWXUHUVSXUFKDVHG86PLOOLRQ
ZRUWK RI URXJK GLDPRQGV IURP
5XVVLDQ PLQLQJ FRQJORPHUDWH $OURVD
LQFRPSDUHGWR86PLOOLRQLQ
UHSRUWV,QWHUID[FLWLQJ$UPHQLD·V
)LUVW'HSXW\(FRQRPLF0LQLVWHU.DULQH
0LQDV\DQ
$FFRUGLQJ WR 0LQDV\DQ WKHUH
LV SRWHQWLDO IRU DGGLWLRQDO GLDPRQG
PDQXIDFWXUHUVWRSXUFKDVHHYHQPRUH
$OURVDURXJKLQWKHUHE\SRVVLEO\
LQFUHDVLQJSXUFKDVHVWR86PLOOLRQ
+RZHYHUVKHDGGHGORFDOGHPDQGIRU
$OURVD·VGLDPRQGVUHPDLQVEHORZZKDW
WKH5XVVLDQFRPSDQ\FDQVXSSO\´2XU
HQWHUSULVHVPLJKWEHDEOHWRSXUFKDVHD
ORWPRUH>GLDPRQGVIURP$OURVD@EXWWKH\
DUHQ·WEX\LQJEDVHGRQFXUUHQWGHPDQG
DQGPDUNHWSULFHVµVKHVDLGDVTXRWHG
E\WKHQHZVVRXUFH
%(/*,80
$QWZHUS
'LDPRQG)DLU
%HOJLXP·V$QWZHUS'LDPRQG)DLU$WWUDFWV0LGGOH(DVW%X\HUV
7KH$QWZHUS'LDPRQG%RXUVHDQGWKH'LDPRQG&OXERI$QWZHUSODXQFKHGWKHWKLUGHGLWLRQRIWKH$QWZHUS'LDPRQG
7UDGH)DLUZKLFKIHDWXUHG$QWZHUSGLDPRQGÀUPV'LDPRQGEX\HUVIURP,QGLD7KDLODQG(XURSHLQFOXGLQJ7XUNH\DQG
WKH0LGGOH(DVWLQFOXGLQJ,VUDHO6DXGL$UDELDDQG/HEDQRQJDWKHUHGLQWKHWUDGLQJKDOOVRI$QWZHUS·VERXUVHVRQ6XQGD\
7KHIDLUFRQFOXGHGRQ-DQXDU\VW
´&RXQWULHVOLNH6DXGL$UDELDDQG/HEDQRQKDYHEHFRPHLQFUHDVLQJO\LPSRUWDQWWDUJHWPDUNHWVIRU$QWZHUSGLDPRQG
ÀUPV7KHVHFRXQWULHVDUHVKRZLQJDVWURQJGHPDQGIRUKLJKHQGJRRGVERWKIRUODUJHORRVHGLDPRQGVDQGIRUXQLTXHKLJK
TXDOLW\GLDPRQGMHZHOOHU\FUHDWLRQVµVD\V3KLOOLSH5LQJHUVDOHVPDQDJHURIWKH$QWZHUSEDVHG'7&VLJKWKROGHU7UDX%URWKHUV
.KDOHG<RVHI$O2ZD\PHUDPHPEHURIWKH1DWLRQDO&RPPLWWHHIRU3UHFLRXV0HWDOVDQG3UHFLRXV6WRQHVRIWKH&RXQFLO
RI6DXGL&KDPEHUVFRQÀUPHGWKDW0LGGOH(DVWHUQEX\HUVZHUHHDJHUWRJDLQGLUHFWDFFHVVWRWKH$QWZHUSGLDPRQGPDUNHW
6X]DQQH(LGJHQHUDOPDQDJHURI&ROOHFWLRQD%HLUXWEDVHGMHZHOU\SXEOLFDWLRQFRRUGLQDWHGWKHYLVLWRIWKH6DXGLDQG
/HEDQHVHEX\HUV·GHOHJDWLRQ6KHQRWHGWKDWZKLOH$QWZHUSZDVDOUHDG\DUHJXODUGHVWLQDWLRQIRUPDQ\RIWKHEX\HUVWKHIDLU
SURYLGHGDQH[FHOOHQWRSSRUWXQLW\WRLQFUHDVHWKHLUVRXUFLQJIRUJRRGV
7KHÀUVWGD\RIWKHIDLUFRQFOXGHGZLWKD*DOD'LQQHUVSRQVRUHGE\WKH$QWZHUS:RUOG'LDPRQG&HQWUH$:'&5DSKDHO
5XELQDPHPEHURIWKH$'7)·V2UJDQL]LQJ&RPPLWWHHZHOFRPHGWKHLQWHUQDWLRQDOEX\HUVDQGUHYHDOHGWKDWEX\HUVIURP1RUWK
$PHULFD&KLQDDQG6RXWK(DVW$VLDZRXOGEHLQYLWHGWRWDNHSDUWLQWKHIDLU
',$021',17(//,*(1&(%5,()6
%5,()/<127('
(ULN-HQVWR6XFFHHG9LFWRUYDQGHU.ZDVW
DV&(2RI$%1$052·V,'-*
$%1$052KDVDSSRLQWHG(ULN-HQVDV&KLHI([HFXWLYH2IÀFHURI$%1$052·V
,QWHUQDWLRQDO'LDPRQG-HZHOU\*URXS,'-*HIIHFWLYH)HEUXDU\DFFRUGLQJ
WRDEDQNDQQRXQFHPHQW
-HQVZKRKDVEHHQZLWK$%1$052IRUPRUHWKDQ\HDUVDQGKDVKHOGYDULRXV
VHQLRUH[HFXWLYHDQGOHDGHUVKLSSRVLWLRQVLQDQXPEHURILQWHUQDWLRQDOUROHVVXFFHHGV
9LFWRUYDQGHU.ZDVWZKRKDVOHG,'-*VLQFH
$V RI 6HSWHPEHU YDQ GHU .ZDVW
9LFWRU
YDQGHU
FRPELQHGKLV,'-*UHVSRQVLELOLWLHVZLWKKLVQHZ
.ZDVW
DVVLJQPHQWDV&RXQWU\([HFXWLYH$%1$052
%HOJLXPDQG&KLHI([HFXWLYH2IÀFHU$%1$052
3ULYDWH %DQNLQJ ,QWHUQDWLRQDO %HOJLXP DQG
/X[HPEXUJ
:LWKWKHDSSRLQWPHQWRI-HQVYDQGHU.ZDVW
ZLOOIXOO\IRFXVRQIXUWKHUGHYHORSPHQWRI$%1
$052·VDFWLYLWLHVLQ%HOJLXPDQG/X[HPEXUJ
QRWHVWKHEDQN
'XEDL3UHVHQFH
,QRWKHU$%1$052QHZVWKHEDQN·V,'-*
KDVRSHQHGDUHSUHVHQWDWLYHRIÀFHLQWKH'XEDL0XOWL&RPPRGLWLHV&HQWUH·V'0&&
$OPDV7RZHUKRPHWRRYHUUHJLRQDODQGLQWHUQDWLRQDOGLDPRQGDQGSUHFLRXV
JHPVFRPSDQLHV,'-*ZLOOSURYLGHFRPPHUFLDOEDQNLQJSURGXFWVDQGVHUYLFHVIRU
ÀQDQFLQJWUDGHÁRZVRIURXJKDQGSROLVKHGGLDPRQGVDQGMHZHOU\
7RFRPPHPRUDWHWKHRSHQLQJ'0&&DQG$%1$052KHOGDULEERQFXWWLQJ
FHUHPRQ\DW$OPDV7RZHUV6SHDNLQJDWWKHHYHQWDVRXWJRLQJ&(2RI,'-*YDQGHU
.ZDVWVDLG´'LDPRQGDQG-HZHOOHU\LVDNH\EXVLQHVVIRU$%1$052%DQNDQGZHDUH
FRPPLWWHGWRWKHLQGXVWU\'XEDLLVDQLPSRUWDQWKXEEHWZHHQ$IULFDQRULJLQJRRGV
DQGWKH$VLDQPDUNHW:HDUHORRNLQJWR
'0&&
V$OPDV7RZHU
JURZRXUEXVLQHVVE\FDSLWDOL]LQJRQWKLV
DORQJZLWKWKHSUHVHQFHRIPDQ\RIRXU
ODUJHJOREDOFOLHQWVLQ'XEDLµ
$KPHG %LQ 6XOD\HP ([HFXWLYH
&KDLUPDQRI'0&&DOVRDGGUHVVHGWKH
FHUHPRQ\VD\LQJ´'0&&VLQFHLQFHSWLRQ
KDV PDLQWDLQHG D VWURQJ UHODWLRQVKLS
ZLWK$%1$052DQGLWLVRXUSOHDVXUH
WRZHOFRPHWKHPWR$OPDV7RZHUWKH
KRPHRIWKH8$(GLDPRQGWUDGH/LNH
'0&&$%1$052KDVGHPRQVWUDWHG
H[WUHPH UHVLOLHQFH DQG FRPPLWPHQW
WRZDUG WKH GLDPRQG LQGXVWU\ GXULQJ
SHULRGVRIHFRQRPLFFKDOOHQJHVDQGWKH
DGGLWLRQRIVXFKDKLJKFDOLEUHFRPSDQ\
WRWKH'0&&FRPPXQLW\FRQÀUPVWKH
8$(·VLPSRUWDQFHDVDVLJQLÀFDQWJOREDO
GLDPRQGKXEµ
$%1$052DOVRKDVFRPSDQ\RIÀFHV
LQ$QWZHUS1HZ<RUN0XPEDL+RQJ
.RQJ-DSDQDQG%RWVZDQD
,VUDHOL'LDPRQG3DYLOLRQ
WR'HEXW
DW)HEUXDU\%DQJNRN)DLU
,Q DQ HIIRUW WR H[SDQG WKH ,VUDHO
GLDPRQGLQGXVWU\·VWUDGHZLWKWKH7KDL
PDUNHWWKH,VUDHO'LDPRQG,QVWLWXWH,',
LVRUJDQL]LQJDQRIÀFLDO,VUDHOL'LDPRQG
3DYLOLRQWRGHEXWDWWKHXSFRPLQJ
%DQJNRN*HPVDQG-HZHOU\)DLU
7KHSDYLOLRQZKLFKZLOOKRVW
,VUDHOL GLDPRQG FRPSDQLHV
ZLOOEHORFDWHGLQWKHGLDPRQG
VHFWLRQRIWKHIDLU7KHSDUWLFLSDWLQJ
FRPSDQLHVDUH$*'LDPRQG'LUHFW
$VL$ELU'LDPRQGV$YL3D]*URXS
&7%'LDPRQGV(0$'LDPRQGV*
$UDERY ,&6 'LDPRQGV 0LUDJH
'LDPRQGV0RU%URWKHUV'LDPRQGV
5HJHQW'LDPRQGV6KORPR%LFKDFKL
'LDPRQGVDQG6RUXP'LDPRQGV
´7KURXJKRXW $VLD GLDPRQG
MHZHOU\LVEHFRPLQJPRUHDQGPRUHSRSXODU
7KH7KDLFRQVXPHULVQRH[FHSWLRQDQG
DFWLYHO\VHHNVWKHJODPRXURIGLDPRQGVDQG
RWKHUOX[XU\LWHPV:HDUHORRNLQJIRUZDUG
WRDJRRGH[SHULHQFHDWWKLVVKRZDQG
H[SHFWLWWREHWKHÀUVWRIPDQ\µVD\V1LVVLP
3DORPR,','HSXW\0DQDJLQJ'LUHFWRUDQG
&KLHI0DUNHWLQJ2IÀFHU
´,',EHOLHYHVLQWKH$VLDQPDUNHWVDQG
VHHVWKHUHJLRQDVWKHPRVWLPSRUWDQW
JURZWKDUHDIRU,VUDHOLGLDPRQGV:HKDYH
HVWDEOLVKHGDIRRWKROGLQ$VLDWRVXSSRUW
WKLVWUDGH2XUUHSUHVHQWDWLYHRIÀFHLQ+RQJ
.RQJ,',$VLD3DFLÀFVHUYHVERWK,VUDHOL
GLDPRQGFRPSDQLHVDQGLPSRUWHUVLQ$VLDµ
DGGV(OL$YLGDU0DQDJLQJ'LUHFWRURI,',
$VLDLV,VUDHO·VVHFRQGODUJHVWGLDPRQG
H[SRUWPDUNHWDFFRXQWLQJIRURYHU
SHUFHQWRIWRWDOSROLVKHGGLDPRQGVDOHV
DFFRUGLQJWR,',
,',ZLOOKDYHDQLPDJHERRWKLQWKH
SDYLOLRQ ZKHUH EX\HUV DUH LQYLWHG WR
UHFHLYHLQIRUPDWLRQDERXWGRLQJEXVLQHVV
ZLWK,VUDHODQGUHJLVWHUIRUWKH,',SRUWDO
VLWH$QRQOLQHPLQLVLWHRQWKH,',SRUWDO
VLWHLQFOXGHVFRQWDFWGHWDLOVRIDOO,VUDHOL
H[KLELWRUVDWWKHVKRZDQGHQDEOHVEX\HUV
WRYLVLWWKHSDYLOLRQYLUWXDOO\EHIRUHWKHVKRZ
&OLFNKHUHWRYLVLWWKHPLQLVLWHKWWSWLQ\XUO
FRPHQISP
',$021',17(//,*(1&(%5,()6
',**,1*7+(',57
*HP'LDPRQGV/HWåHQJ·V3URGXFWLRQ+LWV5HFRUG+LJK
*HP'LDPRQGVKDVUHSRUWHGWKDWLWV/HWåHQJPLQHLQ/HVRWKR
SURGXFHG FDUDWV GXULQJ WKH IRXUWK TXDUWHU HQGHG
'HFHPEHUXSSHUFHQWIURPWKHVDPHTXDUWHUD
\HDUDJR)RUWKHIXOO\HDUWKHPLQHSURGXFHGFDUDWV
VLJQLI\LQJWKHKLJKHVWFDUDWUHFRYHU\LQLWVKLVWRU\
/DUJH6WRQHV
$FFRUGLQJWRWKH/RQGRQOLVWHGPLQHUZKLFKRZQVD
SHUFHQWVKDUHLQWKHPLQHZKLOHWKHJRYHUQPHQWRI/HVRWKR
RZQVWKHUHPDLQLQJSHUFHQWDWRWDORIURXJKGLDPRQGV
WKDWDFKLHYHGYDOXHVJUHDWHUWKDQ86SHUFDUDWZHUH
UHFRYHUHGIURP/HWåHQJGXULQJWKHIRXUWKTXDUWHU2IWKHVH
URXJKGLDPRQGVDFKLHYHGYDOXHVLQH[FHVVRI86SHU
FDUDW,QDOOVXFKGLDPRQGVZHUHSURGXFHGGXULQJ
FRQWULEXWLQJDQHVWLPDWHGSHUFHQWWR/HWåHQJ·VUHYHQXHIRU
WKHIXOO\HDU'XULQJWKHIRXUWKTXDUWHUDORQHURXJKGLDPRQGV
DFKLHYHGDYDOXHLQH[FHVVRI86PLOOLRQHDFKDQGURXJK
GLDPRQGVJUHDWHUWKDQFDUDWVLQVL]HZHUHUHFRYHUHG
'LDPRQG6DOHV
/HWåHQJVROGDWRWDORIFDUDWVRIGLDPRQGVGXULQJ
WKHIRXUWKTXDUWHUHQGHG'HFHPEHUXSSHUFHQW
\HDURYHU\HDU7KHDYHUDJHYDOXHRIWKHH[SRUWVIRUWKHSHULRG
KRZHYHUZDVGRZQSHUFHQWWR86SHUFDUDWIURP
86SHUFDUDWLQWKHIRXUWKTXDUWHURI
)RUWKHIXOO\HDU/HWåHQJVROGFDUDWVXSSHUFHQW
IURP)RUWKHIXOO\HDUWKHDYHUDJHYDOXHRIWKHH[SRUWV
WRWDOHG86SHUFDUDWXSSHUFHQWFRPSDUHGWRWKH
86SHUFDUDWDFKLHYHGD\HDUDJR
´7KHIRXUWKTXDUWHURIVDZURXJKGLDPRQGSULFHVGRZQ
IURPWKHLUKLJKVLQWKHÀUVWKDOIRIWKH\HDUGXHLQWKHPDLQWR
WKHFRQWLQXLQJHIIHFWVRIWKH(XUR]RQHFULVLV+RZHYHUWKHODVW
WZR/HWåHQJWHQGHUVRIWKH\HDUVDZ
DQLPSURYHPHQWLQGHPDQGZLWKD
PRGHVWVWUHQJWKHQLQJRISULFHVLQPRVW
FDWHJRULHVµVD\V&OLIIRUG(OSKLFN*HP
'LDPRQGV&(2
5HJDUGLQJWKHSROLVKHGPDUNHW
*HP'LDPRQGVQRWHVLQLWVWUDGLQJ
XSGDWHWKDW´GXULQJWKHSHULRGWKH
SROLVKHG PDUNHW UHPDLQHG XQGHU
SUHVVXUH DV D UHVXOW RI LQGXVWU\
LOOLTXLGLW\JHRSROLWLFDOXQFHUWDLQW\DQG
LQFRQVLVWHQWGHPDQGIURPUHWDLOHUV
&OLIIRUG
(OSKLFN
3ULFHV DFKLHYHG IRU WKH /HWåHQJ
W\SHKLJKHUTXDOLW\GLDPRQGVZHUH
DSSUR[LPDWHO\VRIWHULQWKHIRXUWKTXDUWHURIZKHQ
FRPSDUHGWRWKRVHSULFHVLQ-XO\7KLVFRPSDUHVWRWKH
SROLVKHGGLDPRQGSULFHVDFURVVWKHHQWLUHLQGXVWU\ZKLFKIHOO
E\DUHSRUWHGLQWKHVDPHSHULRGµ
/HWåHQJ0LQH
/RRNLQJ)RUZDUG
7KHFRPSDQ\SURMHFWVWKDW/HWåHQJSURGXFWLRQZLOOUHDFK
EHWZHHQDQGFDUDWVGXULQJZLWKVDOHV
H[SHFWHGWRLQFUHDVHWREHWZHHQDQGFDUDWV
3URMHFW.KROR/HWåHQJ·VSURGXFWLRQH[SDQVLRQSURMHFW
UHFHLYHGERDUGDSSURYDOLQ1RYHPEHUDQGLWLVSODQQHG
WKDWUDPSXSWRIXOOH[SDQGHGSURGXFWLRQFDSDFLW\ZLOORFFXU
E\-XO\
(OOHQGDOH3URGXFWLRQ
$WWKHFRPSDQ\·V(OOHQGDOHPLQHLQ:HVWHUQ$XVWUDOLD
FDUDWVZHUHUHFRYHUHGGXULQJWKHIRXUWKTXDUWHUGRZQSHUFHQW
IURPD\HDUDJR)RUWKHIXOO\HDUFDUDWVZHUHUHFRYHUHG
GRZQSHUFHQW\HDURYHU\HDU'HVSLWHWKHFDUDWGHFOLQHWKH
PLQHUQRWHVWKDWIRXUWKTXDUWHURSHUDWLRQVVDZD´VLJQLÀFDQW
LPSURYHPHQWµLQSHUIRUPDQFHRYHUSUHYLRXVTXDUWHUV1RYHPEHU·V
FDUDWUHFRYHU\ZDVUHSRUWHGO\WKHKLJKHVWRI
(OOHQGDOH6DOHV
7KHPLQHVROGFDUDWVRIURXJKGLDPRQGVGXULQJWKH
TXDUWHUDWDQDYHUDJHSULFHRI86SHUFDUDWDSHUFHQW
GHFUHDVHLQYROXPH\HDURYHU\HDUEXWDSHUFHQWLQFUHDVH
LQYDOXH)RUWKHIXOO\HDU(OOHQGDOHVROGFDUDWVDWDQ
DYHUDJHSULFHRI86SHUFDUDWDSHUFHQWGHFOLQHLQ
YROXPH\HDURYHU\HDUEXWDSHUFHQWLQFUHDVHLQYDOXH
$VSDUWRILWVORQJWHUPRIIWDNHDJUHHPHQWZLWK7LIIDQ\&R
*HP'LDPRQGVVROGFDUDWVRI(OOHQGDOH·VIDQF\\HOORZ
GLDPRQGVWR7LIIDQ\&RDWDQDYHUDJHSULFHRI86SHU
FDUDWFRPSDUHGWR86SHUFDUDWLQWKHIRXUWKTXDUWHURI
7KLVUHVXOWHGLQDIXOO\HDUDYHUDJHSULFHRI86SHU
FDUDWRIIDQF\\HOORZGLDPRQGVVROGWR7LIIDQ\&RFRPSDUHG
WR86SHUFDUDWIRUWKHIXOO\HDURI
,QWKHIRXUWKTXDUWHUFDUDWVRIFRPPHUFLDOJRRGV
ZHUHVROGDWDQDYHUDJHSULFHRI86SHUFDUDWFRPSDUHG
WR86SHUFDUDWLQWKHIRXUWKTXDUWHUD\HDUDJRUHVXOWLQJ
LQDQDYHUDJHSULFHRI86SHUFDUDWIRUWKHIXOO\HDU
FRPSDUHGWR86SHUFDUDWIRUWKHIXOO\HDU
',$021',17(//,*(1&(%5,()6
',**,1*7+(',57
6WHOODU'LDPRQGV$LPVWR'HOLYHU0DLGHQ5HVRXUFH
6WDWHPHQWVLQ4
6WHOODU'LDPRQGVSOFVD\VLW´UHPDLQVRQWUDFNµWRGHOLYHULQGHSHQGHQWO\FDOFXODWHG
PDLGHQUHVRXUFHVWDWHPHQWVIRULWVNLPEHUOLWHSURMHFWVLQ*XLQHDDQG6LHUUD/HRQHGXULQJ
WKHÀUVWTXDUWHURI
´6WHOODU·VIRFXVGXULQJWKHSDVWVL[PRQWKVKDVEHHQRQWKHJHQHUDWLRQRIPDLGHQ
UHVRXUFHVWDWHPHQWVIRURXUNH\NLPEHUOLWHSURMHFWVDW'URXMEDDQG7RQJRLQ*XLQHD
DQG6LHUUD/HRQHUHVSHFWLYHO\,DPSOHDVHGWRUHSRUWWKDWH[FHOOHQWSURJUHVVKDVEHHQ
PDGHGXULQJWKLVUHSRUWSHULRGµVD\V6WHOODU'LDPRQGV&KLHI
.DUO
([HFXWLYH2IÀFHU.DUO6PLWKVRQ
6PLWKVRQ
*XLQHD
$FFRUGLQJWR6PLWKVRQGXULQJWKHVL[PRQWKSHULRGHQGHG
'HFHPEHUUHVRXUFHGULOOLQJZDVFRPSOHWHGDWWKH
'URXMEDNLPEHUOLWHSURMHFWLQ*XLQHDZKLOHEXONVDPSOLQJ
LV XQGHUZD\ WR REWDLQ GLDPRQG JUDGH DQG YDOXH )RXU
EXONVDPSOHVWRWDOLQJGU\WRQQHVZHUHFROOHFWHGDQG
VWRFNSLOHGEHIRUHWKHHQGRIWKH\HDU7KHSURFHVVLQJSODQW
ZDVFRQVWUXFWHGDQGFRPPLVVLRQLQJFRPPHQFHGLQODWH
*UDGHFRQWLQXLW\DWGHSWKLVEHLQJFDOFXODWHGXVLQJ
PLFURGLDPRQGDQDO\VLVIURPGULOOFRUHZLWKPRVWUHVXOWVKDYLQJ
EHHQUHFHLYHGDQGUHSRUWHG7KHKLJKGLDPRQGDEXQGDQFH
IURPWKHPLFURGLDPRQGVDPSOHVLVFRQVLGHUHGWREHVLJQLÀFDQWDQGFRQVLVWHQWZLWK
WKHH[SHFWDWLRQRIDKLJKJUDGHIRUWKHSLSH
6LHUUD/HRQH
,Q6LHUUD/HRQHUHVRXUFHGULOOLQJDQGEXONVDPSOLQJKDYHEHHQFRPSOHWHGDWWKH
7RQJRSURMHFW$V',%SUHYLRXVO\UHSRUWHGWKHEXONVDPSOLQJHYDOXDWLRQRI7RQJR·V
'\NHNLPEHUOLWHUHWXUQHGGLDPRQGJUDGHVRIFDUDWVSHUKXQGUHGWRQQHVDQGD
GLDPRQGYDOXHRI86SHUFDUDWRQWKHEDVLVRIWZRDJJUHJDWHGGLDPRQGH[SRUWV
PDGHLQWKHUHSRUWKDOI\HDUSHULRG7KHFDOFXODWHGLQVLWXYDOXHRIWKHNLPEHUOLWHLV
FDOFXODWHGDW86
$FFRUGLQJWR6PLWKVRQWKHFRPSDQ\·V.RQRSURMHFWLQ6LHUUD/HRQHVWDQGVWRJDLQ
DZDUHQHVVIURPWKHSODQQHG,32RI.RLGX+ROGLQJ·V.RLGXGLDPRQGPLQHRQWKH+RQJ
.RQJVWRFNH[FKDQJHVLQFH.RLGXLVVLWXDWHGDGMDFHQWWR.RQR
$QJOR$PHULFDQ
'H%HHUV43URGXFWLRQ
GRZQ
'H%HHUV·GLDPRQGSURGXFWLRQIHOO
SHUFHQW\HDURYHU\HDUWRPLOOLRQ
FDUDWVGXULQJWKHIRXUWKTXDUWHUHQGHG
'HFHPEHUDFFRUGLQJWR$QJOR
$PHULFDQ·VXQDXGLWHGSURGXFWLRQUHSRUW
IRU WKH TXDUWHU $QJOR
$PHULFDQ·V SHUFHQW
VKDUHRI'H%HHUV·GLDPRQG
SURGXFWLRQWRWDOHGPLOOLRQ
FDUDWVIRUWKHIRXUWKTXDUWHU
'H%HHUV·IRXUWKTXDUWHU
URXJK SURGXFWLRQ IHOO SHUFHQWFRPSDUHGWRWKH
WKLUGTXDUWHURIZKHQ
SURGXFWLRQWRWDOHGPLOOLRQ
FDUDWV
´7KLV UHGXFWLRQ PDLQO\
UHÁHFWV'H%HHUV·GHOLEHUDWH
I R F X V R Q L Q F U H D V L Q J
ZDVWHVWULSSLQJDVZHOODVVFKHGXOHG
PDLQWHQDQFH DW WKH 'HEVZDQD DQG
'%&0RSHUDWLRQVLQUHFRJQLWLRQRIVKRUW
WHUPJOREDOPDFURHFRQRPLFYRODWLOLW\µ
QRWHV$QJOR$PHULFDQ
'LDPRQGSURGXFWLRQIRUWKHIXOO\HDU
WRWDOHGPLOOLRQFDUDWVDFFRUGLQJWR
$QJOR$PHULFDQ
,Q1RYHPEHU$QJOR$PHULFDQ
DJUHHG WR DFTXLUH DQ LQFUHPHQWDO
SHUFHQW LQWHUHVW LQ 'H %HHUV 7KH
WUDQVDFWLRQLVH[SHFWHGWRFORVHLQWKH
VHFRQGKDOIRI
)LQDQFLDOV
7KHPLQHUUHSRUWVWKDW86PLOOLRQZDV
LQYHVWHGLQDGYDQFLQJ'URXMEDDQG7RQJR
WRZDUGVPDLGHQUHVRXUFHVWDWHPHQWVIRU
WKLVTXDUWHU6WHOODUHQGHGWKHKDOI\HDUZLWK
DORVVRI86PLOOLRQEXWFDVKUHVHUYHV
RI86PLOOLRQDQG86PLOOLRQZRUWKRI
GLDPRQGVLQVWRFNIRUVDOH7KHPLQHU·VQHW
DVVHWVVWRRGDW86PLOOLRQIRUWKHVL[
PRQWKSHULRGFRPSDUHGWR86PLOOLRQ
DVRI-XQH
7KHFRPSDQ\VD\VLWGRHVQRWH[SHFW
URXJKSULFHVLQWRUHSHDWWKHKLJKV
DQGWKHQORZVRIEXWUDWKHUUHPDLQ
PRUHVWDEOH
7RQJR
3URFHVVLQJ
3ODQW
',$021',17(//,*(1&(%5,()6
',**,1*7+(',57
'LDPRQG&RUS,VVXHV0LQH3ODQ5HYLVLRQ)LQDQFH2SWLRQVIRU/DFH
$HULDO9LHZRI/DFH'LDPRQG0LQH
'
LDPRQG&RUSSOFKDVLVVXHGDQRSHUDWLRQDOXSGDWHIRULWV
/DFHGLDPRQGPLQHLQWKH)UHH6WDWH3URYLQFHRI6RXWK
$IULFD7KHSURMHFWFRQWDLQVDQHVWLPDWHGPLOOLRQFDUDWV
RIGLDPRQGVLQWDLOLQJVDQGNLPEHUOLWH
SHUFHQWLPSDFWRQFDSLWDOFRVWV²86PLOOLRQ5PLOOLRQ
FRPSDUHGZLWK86PLOOLRQ5PLOOLRQDQGLQFUHDVHVWKH
UDPSXSWRIXOOSURGXFWLRQIURPPRQWKVWRPRQWKV7KH
86PLOOLRQ5PLOOLRQLQFOXGHVFRQWLQJHQFLHVRI86PLOOLRQ
5PLOOLRQ
'XULQJWKHPRQWKVWRIXOOSURGXFWLRQDSSUR[LPDWHO\
86PLOOLRQ5PLOOLRQLQUHYHQXHLVIRUHFDVWWREHJHQHUDWHG
IURPGLDPRQGVUHFRYHUHGIURPWKHXQGHUFXWLQLWLDOFDYLQJDQG
WDLOLQJVUHWUHDWPHQWDVZHOODVVDOHRIZDVWHURFNSHUFHQW
KLJKHUWKDQWKHSUHYLRXVPLQHSODQ
7KHZRUNLQJFDSLWDOUHTXLUHPHQWIRUWKHPLQHGHYHORSPHQWLV
DSSUR[LPDWHO\86PLOOLRQ5PLOOLRQPRUHWKDQWKHRULJLQDO
/DFHPLQHSODQUHSRUWV'LDPRQG&RUS+RZHYHUEHFDXVHRIWKH
IRUHFDVWKLJKHUGLDPRQGJUDGHDWWKH/HYHOLQLWLDOGLDPRQG
SURGXFWLRQLVHVWLPDWHGDWPRUHWKDQFDUDWVSHUDQQXP
UHVXOWLQJLQIDVWHUSD\EDFNDQGRSHUDWLQJPDUJLQVLQH[FHVVRI
SHUFHQW$WWKLVSURGXFWLRQUDWHDQGFXUUHQWGLDPRQGSULFHV
RI86SHUFDUDWQRWHVWKHPLQHULQLWLDODQQXDOUHYHQXHZRXOG
EHLQH[FHVVRI86PLOOLRQ
0LQH3ODQ5HYLVLRQ
/DFH)LQDQFH2SWLRQV
*HRWHFKQLFDOWHVWZRUNRQWKH/DFHNLPEHUOLWHVDPSOHV
UHYHDOVKLJKURFNVWUHQJWKZKLFKPHDQVWKDWWXQQHOVRQWKH
SURGXFWLRQOHYHOLQWKHEORFNFDYHVKRXOGKDYHDORQJOLIHZLWKRXW
WKHUHTXLUHPHQWIRUPDMRUVHFRQGDU\VXSSRUW:KLOHWKLVVKRXOG
KDYHDSRVLWLYHLPSDFWRQFDSLWDODQGRSHUDWLQJFRVWVRYHUWKH
OLIHRIWKHEORFNQRWHV'LDPRQG&RUSWKHKLJKURFNVWUHQJWK
PHDQVWKDWWKHÀUVWEORFNFDYHZLOOQHHGWREHORFDWHGGHHSHU
WKDQSODQQHGWRHQVXUHWKHUHLVVXIÀFLHQWURFNSUHVVXUHIRUFDYLQJ
WRLQLWLDWH
$FFRUGLQJWRWKHPLQHUQHZPLQHRSWLPL]DWLRQVWXGLHV
FRPSOHWHGGXULQJ-DQXDU\KDYHUHFRPPHQGHGWKH/HYHO
DWDGHSWKRIPHWHUVDVDVXLWDEOHGHYHORSPHQWOHYHOIRU
WKHÀUVWEORFNFDYHZKLFKLVPHWHUVGHHSHUWKDQRULJLQDOO\
SODQQHG7KLVPHDQVWKHWRQQDJHWREHH[WUDFWHGIURPWKH
ÀUVWEORFNLQFUHDVHVE\SHUFHQWIURPPLOOLRQWRQQHVWR
PLOOLRQWRQQHV0RUHRYHUWKHYROXPHRIFRQWDLQHGGLDPRQGV
LQWKHEORFNLQFUHDVHVSHUFHQWIURPPLOOLRQFDUDWVWR
PLOOLRQFDUDWV
$FFRUGLQJWRWKHPLQHUWKHFDYHZLOOEHORFDWHGLQDKLJKHU
JUDGHNLPEHUOLWHZLWKDYHUDJHJUDGHVHVWLPDWHGDWFDUDWV
SHUKXQGUHGWRQQHVFSKWLQWKLVSDUWRIWKHSLSHGXHWRWKH
SUHGRPLQDQFHRIKLJKHUJUDGHFRKHUHQWNLPEHUOLWH)XUWKHUPRUH
ORFDWLQJWKHÀUVWEORFNFDYHSURGXFWLRQWXQQHOVRQWKH/HYHO
DOVRPHDQVWKDWWKHFDYHOLIHLQFUHDVHVIURPÀYH\HDUVWRQLQH
\HDUVDQGWKDWRQO\WKUHHFDYHVZLOOEHUHTXLUHGWRPLQH/DFH
WRWKH/HYHOFRPSDUHGZLWKIRXULQWKHSUHYLRXVPLQHSODQ
,QLWVRSHUDWLRQDOXSGDWH'LDPRQG&RUSDOVRUHSRUWVWKDWLWKDV
HQWHUHGLQWRGLVFXVVLRQVZLWKPRUHWKDQVL[GLIIHUHQWSDUWLHVWKDWDUH
SRWHQWLDOO\LQWHUHVWHGLQSURYLGHGGHEW
ÀQDQFHIDFLOLWLHVIRUWKHGHYHORSPHQW
RIWKH/DFHPLQH
$V VXFK WKH FRPSDQ\ KDV
DSSRLQWHG 65. &RQVXOWLQJ WR
FRPSOHWHWKHQHFHVVDU\,QGHSHQGHQW
(QJLQHHULQJ5HSRUW,(5ZKLFKZLOO
SURYLGHWKHFRPSDQ\DQGÀQDQFLHUV
ZLWKDQLQGHSHQGHQWRSLQLRQRQWKH
SURSRVHGPLQLQJPHWKRGPLQHSODQ
DQGGHWDLOHGÀQDQFLDOPRGHOIRU/DFH
7KH,(5LVVFKHGXOHGIRUFRPSOHWLRQLQ
WKHFXUUHQWTXDUWHU
3DXO
´7KH ORQJWHUP PHWULFV IRU WKH
/RXGRQ
GLDPRQGLQGXVWU\DUHYHU\VWURQJ)HZ
QHZORQJOLIHNLPEHUOLWHPLQHVDUHLQWKHSODQQLQJLQDPDUNHW
ZKHUHHQGXVHUVDUHVFUDPEOLQJWRVHFXUHVXSSO\)RUWKLVUHDVRQ
ZHKDYHDVLJQLÀFDQWQXPEHURIGHEWSURYLGHUVLQWHUHVWHGLQ
FRPPLWWLQJGHYHORSPHQWÀQDQFHIRUWKH/DFHPLQHµVD\V
'LDPRQG&RUS&KLHI([HFXWLYH2IÀFHU3DXO/RXGRQ
$FFRUGLQJWR/RXGRQGLVFXVVLRQVUDQJHIURPSDUWLDOGHEW
ÀQDQFLQJDQGFRQYHUWLEOHVWUXFWXUHVWRFRPSOHWHGHEWÀQDQFLQJ
DQGRIIWDNHDJUHHPHQWV´,ZRXOGH[SHFWWKDWWKHSUHIHUUHG
ÀQDQFLQJRSWLRQZLOOEHGHWHUPLQHGVKRUWO\DIWHU65.GHOLYHURXU
,QGHSHQGHQW(QJLQHHULQJ5HSRUWWKLVTXDUWHUDQGWKDWIXOOVFDOH
PLQHGHYHORSPHQWVKRXOGFRPPHQFHE\WKHPLGGOHRIWKH
\HDUµKHFRQFOXGHV
)LQDQFLDOV
$GGLWLRQDOO\ORFDWLQJWKHFDYHRQWKH/HYHOKDVDQ
',$021',17(//,*(1&(%5,()6
2))7+(6+(/)
7LIIDQ\&R5HSRUWHGO\(\HLQJ
,QGLDQ5HWDLO0DUNHW
&KDUOHV&ROYDUG8QYHLOV(QKDQFHG
¶)RUHYHU%ULOOLDQW·0RLVVDQLWH*HPV
86GLDPRQGMHZHOU\UHWDLOHU7LIIDQ\&RLVUHSRUWHGO\LQ
WDONVWRHQWHUWKH,QGLDQUHWDLOPDUNHWWKURXJKDSHUFHQWMRLQW
YHQWXUHZLWKIRUPHUDFWUHVVDQGFXUUHQWOX[XU\HQWUHSUHQHXU
5HHQD:DGKZD7KHPRJXOZKRDOUHDG\KDVDMRLQWYHQWXUH
ZLWK,WDOLDQOX[XU\EUDQG*XFFLLVSODQQLQJWRÁRDWDQHZ
YHQWXUHWRUXQ7LIIDQ\·VEXVLQHVVDQXQQDPHGVRXUFHWROG7KH
(FRQRPLF7LPHV
:KLOH:DGKZDFRQÀUPHGWR
5HHQD:DGKZD
WKHQHZVVRXUFHWKDWVKHKDVEHHQ
LQWDONVZLWK7LIIDQ\&RVKHVDLG
WKDWQRWKLQJKDV\HWEHHQÀQDOL]HG
0HDQZKLOH7LIIDQ\&R9LFH
3UHVLGHQWRI(PHUJLQJ0DUNHWV
/DXUHQW&DWKDODGLVFORVHGWKDW
WKHFRPSDQ\KDVEHHQSXUVXLQJ
GLVFXVVLRQVZLWKSRWHQWLDOSDUWQHUV
DQGWKDWLWZRXOGDQQRXQFHWKH
GHWDLOVRIDEXVLQHVVVWUXFWXUHLQ
,QGLDZKHQSODQVZHUHÀQDOL]HG
DQGWKHDSSURSULDWHDJUHHPHQWV
ZHUHVLJQHG
´:HYLHZ,QGLDDVDQDWWUDFWLYH
ORQJWHUPJURZWKRSSRUWXQLW\IRU
7LIIDQ\·VµUHSRUWV7KH(FRQRPLF
7LPHVFLWLQJ&DWKDODZKRVHHPHUJLQJPDUNHWVEXVLQHVVFRYHUV
WKH0LGGOH(DVW*XOIFRXQWULHV(XURSH$IULFD7XUNH\DQG,QGLD
$FFRUGLQJWRWKHXQQDPHGVRXUFH&DWKDODLVOHDGLQJ7LIIDQ\·V
QHJRWLDWLRQVZLWK:DGKZDRXWRI'XEDLZKHUHKHLVEDVHG
7LIIDQ\·VLVKRSLQJWRFDSWXUHDSLHRIWKHFRXQWU\·V86ELOOLRQ
OX[XU\PDUNHWZKLFKLVH[SHFWHGWRJURZPRUHWKDQSHUFHQW
D\HDUWR86ELOOLRQE\QRWHVWKHQHZVVRXUFH
0RLVVDQLWHFUHDWRU&KDUOHV&ROYDUG/WGKDVSDUWQHUHGZLWK
JHPVWRQHHQKDQFHPHQWODERUDWRU\6HUHQLW\7HFKQRORJLHV,QF
WRFUHDWHPRLVVDQLWHJHPVWRQHVZLWKZKLWHURSWLFDOSURSHUWLHV
7KHHQKDQFHGJHPVWRQHVPDUNHWHGDV´)RUHYHU%ULOOLDQWµ
DUHSROLVKHGPRLVVDQLWHWKDWKDYHJRQHWKURXJK6HUHQLW\
7HFKQRORJLHV·SURSULHWDU\SURFHVVZKLFKWUDQVIRUPVHDFK
VWRQHXSWRIRXUFRORUJUDGHVZKLWHURQWKH
*HPRORJLFDO,QVWLWXWHRI$PHULFD·VQHDUFRORUOHVV
VSHFWUXP
´$VDIRUPHUMHZHOU\UHWDLOHU,UHFRJQL]HG
WKHLPSRUWDQFHRIEHLQJDEOHWRPDUNHWD
ZKLWHUJHPDQGVRXJKWWRSURYLGHRQHVLQFH
MRLQLQJ&KDUOHV&ROYDUG6HUHQLW\7HFKQRORJLHV
SURYLGHGWKHVROXWLRQWKDWEHVWPDLQWDLQVWKH
LQWHJULW\RIRXUPRLVVDQLWHJHPVWRQHDQG,·P
H[FLWHGWREHDEOHWREULQJ)RUHYHU%ULOOLDQWJHPV
WRPDUNHWRSHQLQJDZKROHQHZFKDSWHUIRU
PRLVVDQLWHVDOHVµVWDWHV5DQG\10F&XOORXJK
&KLHI([HFXWLYH2IÀFHURI&KDUOHV&ROYDUG/WG
´6HUHQLW\KDVGHYHORSHGDUDGLFDOO\GLIIHUHQW
SURSULHWDU\SURFHVVRIZKLWHQLQJPRLVVDQLWH
WKDWJUHDWO\LPSURYHVWKHFRORUDQGEULOOLDQFH
RIPRLVVDQLWHZLWKRXWDQ\UHVLGXDOQHJDWLYH
HIIHFWVµDGGV'U6XQHHWD1HRJL3UHVLGHQWRI
6HUHQLW\7HFKQRORJLHV,QF
7KHQHZ´)RUHYHU%ULOOLDQWµEUDQGRI&KDUOHV&ROYDUG&UHDWHG
0RLVVDQLWHLVDYDLODEOHRQWKH1RUWK&DUROLQDEDVHGFRPSDQ\·V
HFRPPHUFHVLWHPRLVVDQLWHFRPDQGVRRQWKURXJKLWVFXUUHQW
GLVWULEXWRUV
(DFKVWRQHZLOOEHDFFRPSDQLHGE\D&KDUOHV&ROYDUG
FHUWLÀFDWLRQDQGODVHULQVFULEHGRQWKHJLUGOHIRULGHQWLÀFDWLRQ
',$021',17(//,*(1&(%5,()6DYDLODEOHRQO\E\
VXEVFULSWLRQLVSXEOLVKHGRQDZHHNO\EDVLVWRHQVXUHDVSHHG\
GLVVHPLQDWLRQRILQIRUPDWLRQLQGLVSHQVLEOHWRH[HFXWLYHVLQWKH
GLDPRQGDQGGLDPRQGMHZHOU\EXVLQHVV:KLOHWKHLQIRUPDWLRQKHUHLQLVFDUHIXOO\
FRPSLOHGIURPVRXUFHVEHOLHYHGUHOLDEOHQRUHVSRQVLELOLW\IRULWVDFFXUDF\FDQ
EHDVVXPHGDQGQRUHSUHVHQWDWLRQRIZDUUDQW\H[SUHVVHGRULPSOLHGLVPDGHDV
WRWKHLUFRPSOHWHQHVVRUFRUUHFWQHVV
'LDPRQG,QWHOOLJHQFH%ULHIVPD\QRWEHUHSURGXFHGGLVWULEXWHGSXEOLVKHG
RUXVHGRWKHUZLVHIRUDQ\SXUSRVHEXWIRUWKHSHUVRQDOLQIRUPDWLRQRIWKH
VXEVFULEHUZLWKRXWWKHSULRUZULWWHQFRQVHQWRIWKHSXEOLVKHU
\HDUVXEVFULSWLRQ86,QGLYLGXDOLVVXHVRI',%DUHDYDLODEOHIRU86
ZHEVLWHZZZGLDPRQGLQWHOOLJHQFHFRP
(GLWRULDODQG5HVHDUFK0DQDJHPHQW
&KDLP(YHQ=RKDU(GLWRU
5DFKHO6HJDO0DQDJLQJ(GLWRU
$QDW+RG*UDSKLFV
6XEVFULSWLRQVDQG&LUFXODWLRQ
&(=+ROGLQJV/WG
6LOYHU%OGJ$EED+LOOHO6W5DPDW
*DQ,VUDHO
32%5DPDW*DQ,VUDHO
7HO)D[
RIÀFH#WDF\FRLO
ZZZGLDPRQGLQWHOOLJHQFHFRP
‹&RS\ULJKW
E\'LDPRQGLQWHOOLJHQFH6HUYLFHV,QF
',$021',17(//,*(1&(%5,()6