“MINING IN COLOMBIA: STATUS OF INVESTORS’ CHECK-LIST"

1. “MINING IN COLOMBIA: STATUS OF INVESTORS’ CHECK-LIST" mineSouth America: Focus on Colombia June 17, 2010 TORONTO - CANADA Jorge A. Neher jorge.neher@macleoddixon.com

2. Mining Investment in the World Estimate of Aggregate World Exploration Budget 1989-2008 (US $ billion) (excluding uranium) Investment in mineral exploration keeps growing worldwide, even in spite of the 2008-2009 economic crunch.

3. Latin America as a Target for Mining Investment Latin America continues to grow as a target for mining investment in the world. In 2008 it attracted 25% of mining investment, from 22% four years earlier (despite shut down of several important jurisdictions) World Exploration Budget by Region, 2004-2008 (as a percentage of the worldwide annual exploration budgets)

4. Where is Mining Investment Going in Latin America? México, Perú, Chile & Brasil continue to lead as mining investment targets in Latin America: 18% of world investment (vs 17% in 2007) and 72% of investment in Latin America (vs 75% in 2007). Top 10 Exploration Budgets by Country in 2008 (exploration budget in top 10 countries amounts to 69% of the total world exploration budget (2008, $12.6 billon)

5. Colombia as Recipient of Mining Investment: (cont.) The shut down of some of the most prospective countries for mining investment in Latin America, such as Bolivia, Ecuador and Venezuela, together with the right economic, security and investment promotion policies instrumented by the Colombian government, have resulted in and important increase of mining investment in Colombia.

6. Colombia as Recipient of Mining Investment: (cont.)

7. Mining Investment Trends in Latin America: Mining Competitive Index for LatAm Countries (according to the Fraser Institute) • General Down Trend: • Average Competitivness 2005/06: 51.2 • Average Competitivness 2008/2009: 37.3 • Because of several tragedies and few exceptions • The Tragedies: • Out of the worst 10 performing countries, 5 are in Lat Am: Venezuela, Ecuador, Guatemala, Honduras and Bolivia. The others are India, Zimbabwe, Krigystan, DRC and Indonesia. • Bolivia: 2005/06 = 24.5; 2008/09 = 16.5 • Ecuador: 2005/06 = 33.9; 2008/09 = 4.1 • Venezuela: 2005/06 = 13.2; 2008/09 = 3.7

8. Mining Investment Trends in Latin America: (cont.) • The Exception: Colombia • Colombia: 2005/06 = not featured; 2006/07 = 24.6; • Colombia: 2007/08 = 26.3; 2008/09 = 43.0 • From spot 56 in 2007/08 to spot 46 in 2008/09 • One of the most important relative advances in the ranking

9. The Latin American “Hit Parade” of Mining Policies 2008/09: (/100) • Chile = 79.9 • México = 57.7 • Perú = 56.6 • Brasil = 47.1 • Colombia = 43.0 • Argentina = 33.0 • Bolivia = 16.5 • Ecuador = 4.1 • Venezuela = 3.7

10. Competitive Aspects of Colombia:(according to investors) • Management, interpretation and application of regulations: even above B.C. • Environmental Regulations: even above Brasil and Perú* • Zoning (protected areas & natural parks): again, above Brasil and Perú* • Fiscal Regime: also above Brasil and Perú • Labor Regulations: above México, Brasil and Perú. • Reasonable Regulatory and Business Environment * This will surely go down in next survey

11. Aspects to Improve: • Infrastructure and roads • Political Stability (although this is a big misperception) • Security • Geological data • Community Development Conditions • Availability of mining qualified personnel

12. Geological History of Mining in Latin America • Precambrian: To be or not to be? • Economic Liberties? • Open for Business? • Mining tolerated? • Paleozoic: Going beyond prejudices • Zoning limitations for mining • Environmental oposition • Mining as a political instrument • Institutional development • Small businesess: vulnerable

13. Geological History of Mining in Latin America (cont.) • Mesozoic: Building Competitivness • Fiscal Regime • Incentives to Investment • Security • Access to capital markets • Generalizing “best practices” • Juniors to Majors • Cenozoic: Mining is like Coffee Growing • Industry recognized as any other • Sofisticaction of personnel and services • Internationalizacion of investment • Big mergers and acquisitions

14. Evolution vs Involution: • Anything built over much time and effort can go back in history real fast (from human back to ape): i.e. growing environmental limitations and requirements, increased taxes, etc. • A sustained push in the way of government policies and investment is required to keep evolving: until a solid industry is in place

15. Where are Latin American Countries in terms of Geological Mining History?

16. The Challenge of the Future: Combining mining policies with geological potential • Perú • Chile • México • Brasil • Argentina • Colombia • Ecuador • Bolivia • Venezuela • Combination produces different results

17. CONCLUSIONS • Colombia has been quite successful in attracting mining investment in recent years • However, it has yet to consolidate a strong or stable mining industry (save for coal) • It is imperative to avoid going back on competitive aspects and improve on the non- competitive ones • Consolidation of a strong industry will require a sustained effort in time • It appears that Colombians are engaged

18. GRACIAS!! Jorge A. Neher jorge.neher@macleoddixon.com Tel: +57 1 756 0080 Cell: +57 300 285 1562