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TWST: David, what, in your view, is it going to take to get some significant movement in the price of gold?

Mr. Mallalieu: I think that there are going to have to be several changes. One, which has already been iterated, is at the very least a macroeconomic change; this would go hand-in-hand with a change in sentiment toward the security of the various financial instruments — i.e., the US dollar and others. I also think that there is going to have to be some responsibility taken by the central banks and the producers themselves. The central banks will have to refrain from selling gold. This will, at least, to some degree affect, the sentiment of the individuals and institutions that buy and sell gold. We don’t need the central banks threatening to sell gold constantly. This is obviously a depressing factor for the gold price. The gold miners themselves must also take a degree of responsibility with regard to the amount of gold they’re producing, the cost they’re producing it at, and their lack of responsibility in supporting the metal.

TWST: Tell us about the mid-tier companies that you wanted to highlight.

Mr. Mallalieu: There are three mid-tier companies in the North American sector that we like. Meridian Gold (NYSE:MDG), Goldcorp, Inc. (NYSE:GG) and Agnico-Eagle Mines Limited (NYSE:AEM) are three companies that are the epitome of well managed companies. They have strong assets in whole balance sheets, and all have blossomed in an environment that has not been very conducive to growth. I think it just goes to show you that when you focus your efforts and when you have a dedicated entrepreneurial team, which all three of them have, you can get some good things done. My hat is off to all three companies. I think they've done a fantastic job. They continue to hit the ball in the park in their own way. Agnico-Eagle has been trying to get to their ore body 6,000 feet below the ground. With perseverance they finally got there.

TWST: David, you told us before that you did not find the juniors very interesting at this point in time. What about the mid-tier companies? Are you looking at any of them?

Mr. Mallalieu: I refer to the attractive mid-tier producers as the AGMs. This is the acronym for Agnico-Eagle, Goldcorp, and Meridian Gold. There’s not much more you can say. They’re all very well run companies. They had a plan starting three years ago, they stuck to that plan, and they’ve converted. One should be aware that Agnico-Eagle gets a small component of its revenues from silver, copper and zinc production (24% of zinc production at US0.55 per pound in 2001). More importantly, however, they have got a spectacular reserve of copper and zinc. We estimate that based on a US290 gold price and a US0.6 per pound copper price, slightly more than 50% of the company’s revenues will be generated by gold in 2001. We have the gold revenue component increasing up to 60% until 2006 when it starts to decline. The robustness of the LaRonde deposit enables the company to have more flexibility with regard to the composition of the ore that it mines. If there is a spike in the copper or zinc market, the company has the flexibility to modify its mine plan and focus on different parts of the mine where there are higher zinc and/or copper grades. One must also note that some areas are not currently considered as reserves because they do not meet the C55 per ton NSR requirement.