Bei_Rhenium_jederzeit_ruckartige_Preiserhöhungen_zu_erwarten_EN

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Sudden Rhenium Price Increases to be Expected at Any Time

Author of the following study: Perfect Management Services AG, FL-9495 TriesenSources: market figures, to some extent estimates by market experts and market

participants

Triesen, July 2012

Introduction:Rhenium belongs in the category of strategic metals, which are not to be confused with therare earth metals. If you want to acquire further basic knowledge on strategic metals, you willfind a practical introduction in our study dated November 2011 (www.safeport-funds.com /heading Publications / Short Investment Study on Rhenium). Rhenium has the second-highest melting point (3184 C) of all metals; therefore, it is used as an alloy metal in workpieces that are required to function flawlessly at high temperatures (e. g. aircraft turbines).

From a technological perspective, rhenium has an absolute monopoly; as an alloy metal,cannot be substituted by other metals for crucial applications.

The SafePort Strategic Metals & Energy Fund buys and stores rhenium in physical form,which represents approximately 85% of the total fund assets. The fund's asset managementhas established a high level of expertise in the sector of the highly demanding rheniummarket. The fund is organised in such a way that the physical rhenium is purchased withoutthe burden of value added tax. Rhenium is one of Earth's rarest elements (the annualproduction from the metal mines is only 45 tons; in contrast, the gold production is 2,800tons per year). According to our estimation, the foreseeable lack of rhenium will lead to ahigh increase in the price of rhenium.

Information on the supply and demand of rhenium:In 2012 Boeing and Airbus are delivering approximately 600 new commercial aircraft.A forecast issued by Boeing in July 2012 anticipates that from 2013 to 2031 (i.e. within aperiod of 19 years) the rollout total of all aircraft manufactures will add up to 34,000commercial aircraft. On average this means a delivery of 1,700 commercial aircraft per year.As additional deliveries of commercial aircraft will commence from Russia with effect from2016, and from China with effect from circa 2018, the forecast provided by Boeing can bedescribed as very cautious. Therefore, Boeing's forecast anticipates a 50% increase in newcommercial aircraft volume. Taking into account the planned production of commercialaircraft in Russia and China, we rather expect a 60% to 75% increase in the commercialaircraft delivered compared to 2012.

However, the supply from mine production and recycling can only be increased by 15% -20% during the specified period.

As there is already a gap in the supplies of rhenium in 2012 and only minor metal reservesare available, this results in a long-term, price inelastic gap in supplies. Price inelasticmeans that the rhenium users buy the supplied quantity of the metal even if the pricemultiplies. Taking into account the fact that it cannot be replaced by technology, the shortageof rhenium will lead to a serious technological problem and to dramatic price increases.


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Rhenium demand 2013

Assumption: recessive economic situationCivil aviation/replacement demand: 31 tonsCivil aviation/new deliveries 22 tonsMilitary demand 7 tonsOther industry 10 tonsInvestor demand ? tonsIndustrial stock-building ? tons

Total demand 2013 70 tons + ? tons ofinvestor demand andindustrial stock-building

Buffer: available rhenium reserves as of 31 December 2012:With the available stocks we differentiate between non-available strategic positions andthose that are supplied to the market. For example, China is likely to have stocks of

approximately 10 tons of pure rhenium. However, this material is being stockpiled for its ownfuture use.

Available total Available for market needs

Trade organisations(western world): 10 tons 3 tons for

market needs

China: 10 tons no stock for ongoingmarket needs

Russia and associatecountries available: no stocks available no stock for ongoing

market needs

From rhenium-containing scrap(worldwide): 8 tons 4 tons---------------------------------------------------------------------------------------------------------------------------

Investors: 3 tons no stock for ongoingmarket needs

Stock-holdingtotal as of 31/12/2012: 31 tons 7 tons (actually available)

Rhenium supply 2013 (including scrap available on the market)

Mine production 45 tonsFrom stock of scrap as of 31/12/2012 4 tonsFrom recycled scrap newly accruing in 2013 14 tons (converted into pure rhenium)From buffer trade organisation as of 31/12/2012 3 tons

Total 2013 supply 66 tonsExcess rhenium demand 2013:4 tons + ? tons of demand from investors + ? tons of stock-piling by industrial users,i.e. a shortfall of 10 tons or more


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Important information:

It cannot be ruled out that the demand will significantly increase as early as thecurrent year, 2012, either as a result of investors or stock-piling by users. This wouldremove physical stock from the current industrial demand and, therefore, result in adistinct shortage of rhenium already with effect from 31 December 2012.

With regard to the supply from mine production, an increase in the supply can onlybe expected once the Ivanhoe metal mine in Australia has started production.However, this will not be able to close the gap in supplies and it will most likely notcontribute significantly to the supply until 2015. As a result, the global mineproduction of rhenium remains at approximately 45 tons per year. The global orereserves are sufficient to cover the rhenium demand for approximately 40 years.However, rhenium is only a minor by-product of a small number of copper andmolybdenum mines. The rhenium content in ore is approximately a mere 0.1% to0.2%. Therefore, the mine production cannot be increased but is dependent on theproduction of copper and molybdenum.

The bulk consumers, i.e. the manufacturers of aircraft engines, have negotiated 5-year fixed-price contracts with trade organisations and mine producers until the endof 2012. As can be perceived from within the sector, only 5-year contracts without afixed price are said to have been entered into with effect from 2013. This way therhenium producers want to be able to benefit immediately from the impending priceincreases.

A direct investment in physical rhenium is not recommended as the rhenium marketis by far too difficult for uninitiated participants. The context of the SafePortStrategic Metals & Energy Fund provides the investor with an investment thatconsists of 80% to 90 % rhenium. Investors benefit from the perfect liquidity of their

investment at any time. They may sell their shares during any week and will gainliquidation proceeds within the range of the official market prices. The fund itself hasa clear exit strategy and is likely to even achieve a price surcharge on the marketprice at the given time of selling a large quantity as, when there is a distinct shortage,there are several buyers looking for large quantities.

Security: The physical rhenium, which the fund is stockpiling, represents theinvestor's security. This is a good security basis given the sketched out developmentof a long-term shortage. And don't forget - rhenium cannot be substituted as thereare no other metals that have an equally high melting point plus the chemical andphysical properties that rhenium holds.

Ramifications:We evaluate rhenium as a capital investment, which safeguards a high level ofsecurity and maintains the value of the invested capital on account of the givenphysical value basis. The market conditions give reason to expect a substantial, long-term increase in the value of rhenium. With an investment in the SafePort StrategicMetals & Energy Fund, the investor will be able to benefit optimally from the growthpotential of the metal rhenium.

Triesen, July 2012 Perfect Management Services AG

For the disclaimer, please refer to the following page


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Disclaimer

Due to the public ban on advertising of foreign funds, such as the SafePort Strategic Metals& Energy Fund, which exists in various countries, this study may only be passed on toexisting clients or within the personal network (= limited number of people). Whilst theSafePort Strategic Metals Fund may be invested in without difficulty, with the exception ofresidents of the USA, it must not be publicly advertised.

This information has been collected and presented by the author with great diligence and ahigh level of expertise. The author cannot guarantee that the expectations he has expressedare correct and will occur.

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