Money4Gold Holdings Inc

Transcription

1 Money4Gold Holdings Inc Price (US$) 0.37 Market Cap (m) Research Report April 2009 Investment Summary Money4Gold Holdings Inc. (MFGD) is the first publicly traded company involved in precious metals recycling using this business model. The Company s position provides shareholders an opportunity to participate in an unusually high-growth situation. MFGD is at the forefront of a broad recycling trend and is producing gold, silver, platinum and other precious metals by recycling customers' unwanted or broken jewellery, coins, select electronic components and other items in the U.S. and internationally. With a direct relationship with one of America's largest and most respected refiners, Money4Gold is committed to making a faster, safer and more convenient transaction with a more equitable payout to customers than some traditional outlets and other market competitors, because they by pass the recycling intermediaries. A Major Opportunity, both Nationally and Internationally In line with its global expansion strategy, MFGD commenced overseas operations by opening the new office in the United Kingdom March MFGD also acquired Money4Gold.ca at the beginning of The purchase of Money4Gold.ca, which had no prior relationship with MFGD, provides the company with immediate presence throughout Canada. The broader base of international operations will enable MFGD to further expand sales, increase efficiencies, and now service customers throughout the United States, Canada and the United Kingdom. Industry Outlook The increase in the recycling of precious metals is a powerful trend that many investors have not actually noticed. Recycling is the second largest source of gold, silver and platinum supply. Because of supply imbalances, it is increasingly significant to the precious metals markets. Recycling accounts for 27% of the global supply of gold. The recovery of gold by this method has risen from 14 million ounces in 1997 to approx. 30 million ounces worldwide in SHARE DETAILS CODE MFGD LISTING OTCBB SECTOR SHARES IN ISSUE PRICE 52 weeks High 1.65 Low 0.03 BALANCE SHEET Debt/Equity 2008e (%) NAV ( m) (Net borrowings)/cash (US$m) BUSINESS Money4Gold Holdings Inc purchases unwanted or broken jewellery, or items containing precious metals. The company then takes the items to be refined into pure form and sold at market value. Financials The Company reported revenue in the range of $1.5 million for the second half of For 2010 and 2011 we predict the Company's revenue to grow at triple-digit rates. At current growth rates, MFGD would turn profitable in GEOGRAPHY USA CANADA ANALYST UNITED KINGDOM Valuation The company is seeking at least US$5m to increase its market presence throughout North America and the UK. On our assumptions the market is valuing the company at only twice its NPV. Our target price is US$0.75 by 2010 valuing the Company at US$59m. Guy Hardingham +44 (0) ghardingham@vsacapital.com

2 2 MONEY4GOLD HOLDINGS INC RESEARCH REPORT APRIL 20099} VSA CAPITAL INVESTMENT RESEARCH Investment Summary: A Major Opportunity Future Growth Valuation MFGD commenced operations in Europe with the opening of a new office in the United Kingdom. The UK operations have been established and the management intends to grow the company organically. The money raised will be used for marketing the company in the UK which will become the headquarters for further expansion throughout Europe starting in Spain. MFGD will utilise the already successful business plan established in America. They will have a state-of-the-art facility that houses a wide assortment of equipment, allowing them to process and accurately sample customers' material, regardless of the form in which it is received. MFGD has also outsourced call centre operations. By outsourcing these activities, the company ensures a much lower cost and is able to successfully compete against jewellery stores or pawnshops. Industry Outlook Every region reported higher levels of gold recycling last year, largely because of profit taking and distress selling by individuals. Western markets saw their scrap supplies exceed the already elevated levels of In the United States and Europe, a combination of the rapid economic downturn, together with a far greater ease of selling old jewellery, partly because of greater advertising by scrap collectors, produced record levels of recycling in each market. The first quarter of 2009 scrap supply has exceeded the already high levels witnessed at the end of last year and this is set to continue. On our assumptions the market is valuing the company at only twice its NPV. This is based on a minimum raise of US$5m, and a discount rate of 5% on future earnings. We consider, however, that taking into account the company s forecasts, which appear realistic, the company can more than double its EPS. This implies a share price of $ $0.80 on a prospective multiple of around 4. On trading grounds alone a mid-price of $0.75 would thus be our target, looking out to, say, the second half of This would put a value on the whole company of $59m. There are no listed companies that are directly comparable with MFGD. The company's closest peer is privately-held Cash4Gold. Cash4Gold started in July 2001 with an initial investment of US$30,000, and turned profitable in the same year. It generated its first million in revenue in 2002 with sales of US$3 million and continued its rapid growth with US$4.1 million in revenue in 2003 and more recently US$41 million in revenue in Cash4Gold recently raised US$40 million through venture capital investors and with its already rapid growth, a possible sales forecast for this year could be close to US$100 million. Financials The Company reported revenue in the range of $1.5 million for the second half of 2008 and we predict for 2010 and 2011 the Company's revenue to grow at triple-digit rates. At current growth rates, MFGD could turn profitable in 2009.

3 VSA CAPITAL INVESTMENT RESEARCH 0 RESEARCH REPORT APRIL Background MFGD is the first publicly traded company involved in precious metals recycling using this business model. The Company trades over-the-counter in the U.S. and has also listed its common stock on Germany s Frankfurt exchange under the symbol MGL.GR. The Company s position as the first such public company in North America provides shareholders with an opportunity to participate in an unusually high-growth situation. Traditionally independent jewellery stores or pawn shops buy materials directly from the public and they, in turn, sell to an aggregator who also, in turn, sells to the refinery. MFGD s business model eliminates the intermediaries who have taken the majority of the margin and pass on the savings to customers ensuring higher payouts, while earning a robust margin for the company. MFGD offers the upside potential of the thriving precious metals markets by the broad-scale acquisition, recycling and production of gold, silver and platinum, while concurrently providing a new level of service and payout to individuals and groups wanting to sell their precious metals. MFGD s business is based on collaboration between direct marketing and a precious metals refinery. Today, the convenience of the Internet and the security and integrity of MFGD s online and shipping procedures make a compelling business model for serving these individuals better. The Company is engaged in the recycling and refining of gold, silver and other precious metals from scrap sources using the most technologically advanced refining and assay equipment. MFGD purchases unwanted or broken jewellery, coins, select electronic components and other items containing gold, silver, platinum, palladium and other precious metals directly from consumers and treats these metals with a proprietary process to produce refined metals. The Company earns profits from the value added in transforming gold (or other precious metals) to a more refined state. Method of Operation Interested parties enter their information in the Company s Web site or call a toll-free number to receive a return mail package provided by the Company. When the customer completes the form provided on the Web site, the Company sends a package (G-Pak) containing all the needed materials to ship items to MFGD s refinery. The G-Pak contains a welcome letter, a Ziploc pouch and a self-addressed, postage-prepaid return mail envelope. The customer deposits the envelope in any national Postal Service mailbox. MFGD covers the cost of shipping and the package is insured against loss or damage for up to $500 in value and can be tracked using the tracking number that is provided to the customer. Once the piece is received, the Company analyses the valuables using non-destructive testing and assigns a value to them based on weight, purity and the current market price of the precious metal. Each lot received is weighed, assigned a lot number and logged into the system. Because MFGD does 100% of the assaying and refining in-house, the Company ensures a very high standard of quality control over its refining services. Within 24 hours of receipt of the item a cheque will be mailed to the customer. If accepted, the items will be refined into pure form. If the customer is not satisfied with the offer, he can return the check to the Company and the items will be shipped back to the customer. The price is nonnegotiable and customers have 10 days to accept or reject the offered price. The process is simple and quick.

4 4 MONEY4GOLD HOLDINGS INC RESEARCH REPORT APRIL 20099} VSA CAPITAL INVESTMENT RESEARCH Partnership with Republic Metals A major competitive advantage for MFGD is its direct relationship with one of America s largest and most respected precious metal refiners, Republic Metals. MFGD is one of the few recyclers to have a relationship with a major refinery and as a result of this relationship they are able to maintain a low-cost structure and provide significantly higher returns. Republic Metals is a major shareholder (12%) in the Company and has representation on MFGD s board of directors. Republic Metals services all of MFGD s U.S.-based operating needs, including assessment of customer materials, assaying, warehousing, refining and selling. This refiner has been in business for more than 35 years and generates annual revenues of around $2.5 billion. It refines and recycles materials from the jewellery, mining, electronics and industrial sectors and has the expertise and capacity to handle precious metal lots of any type or size. Republic Metals is the first U.S. refinery to be ISO certified and recognized by the U.S. Department of Energy for its commitment to national environmental protection. Republic Metals is also a patron member of the International Precious Metal Institute (IPMI) Board of Directors IPMI, and a member of Climate Wise, Performance Track and the Jewellers Board of Trade. The refiner s state-of-the-art facility houses a wide assortment of equipment, allowing it to process and accurately sample customer s material, regardless of the form in which it is received. The Company then uses the most economical method to treat and refine the item. All testing and analysis is performed using procedures governed by a quality operation program. Samples are taken and assayed at each step of the refining process to maintain the high purity of end-products. All measuring instrumentation and equipment are calibrated to standards set by the National Institute of Standard Technology and are supported by certifications to substantiate all claims. Republic Metals maintains strict quality control procedures, inspecting measuring and testing its equipment as required by ISO Quality Certification. MFGD has also outsourced call centre operations. By outsourcing these activities, the Company ensures a much lower cost and is able to successfully compete against jewellery stores or pawnshops. A Major Opportunity, both Nationally and Internationally In line with its global expansion strategy, MFGD commenced operations in Europe with the opening of a new office in the United Kingdom. The UK operations have been established and the management intends to grow the company organically. The money raised will be used for marketing the company in the UK which will become the headquarters for further expansion throughout Europe starting in Spain. MFGD will utilise the already successful business plan established in America. They have a state-of-the-art facility that houses a wide assortment of equipment, allowing them to process and accurately sample customers' material, regardless of the form in which it is received. MFGD has also outsourced call centre operations. By outsourcing these activities, the company ensures a much lower cost and is able to successfully compete against jewellery stores or pawnshops. The current CEO of MFGD Hakan Koyuncu will oversee the European expansion using both his knowledge of the MFGD business model but also his expertise in marketing as the cofounder and CEO of Leadcreations.com, LLC, one of the top internet-based lead generation firms. In connection with this launch, MFGD has forged a strategic alliance with Evolution DM,

5 VSA CAPITAL INVESTMENT RESEARCH 0 RESEARCH REPORT APRIL a UK-based marketing firm with over 20 years of marketing experience, which will be lending local expertise in both the marketing and fulfilment aspects of the UK expansion. The broader base of international operations will enable MFGD to further expand sales, increase efficiencies, and now service customers throughout Europe and the United States. Use of Funds - Marketing Strategy The internet is changing the way individuals and groups recycle their precious metals items. Historically, people went to their local jeweller or pawnshop for precious metals recycling and received a modest percent of the true value of the precious metal content. MFGD is changing this model by aggregating precious metal items for recycling and marketing its services over the Internet and other direct channels. By soliciting customers through low-cost channels and connecting them directly with refineries, MFGD eliminates the intermediaries who historically took large margins. As a result, the Company is able to offer a better payout to sellers. MFGD reaches its potential customer base primarily through online advertising. Through their relationship with a direct marketing/online lead generation company co-owned by the Chief Executive Officer and access to their proprietary software, MFGD can strategically market their product through targeted internet advertising. MFGD s online electronic creative pieces, most commonly banners and contextual banners, are placed on publisher websites focused on generating potential customers by driving traffic to one of their websites. The Company markets its services through Money4Gold s consumer websites, including: in either English or Spanish for the USA; in either English or French for Canada; in English for the UK These Web sites provide a low cost way to reach consumers and convenient, efficient and secure channels through which individuals can recycle items containing precious metals. When a customer clicks on there advertisement, they are sent to their website and asked to provide their address in order to obtain the package to send their precious metals to Republic Metals. With the completion of this fund raising, MFGD will be ready to also generate traffic through various regional and national print, TV and radio advertising and achieve meaningful revenue. Acquisitions MFGD acquired Canadian Money4Gold.ca at the end of The purchase of Money4Gold.ca, which had no prior relationship with MFGD, provides the company with immediate presence throughout Canada. With this acquisition, MFGD becomes an international market leader in the consumer-based cash for precious metals space and is now serving Canadian consumers through the website The acquisition will provide the Company full licensing and compliance to operate in all Canadian markets, while also adding two highly experienced industry executives to MFGD s management team. With over 25 years of combined jewellery and precious metals experience, Shay Danan and Sharon Danan will join the MFGD team, with Sharon Danan serving as the Canadian operations Chief Executive Officer. The two brothers were the founders of Money4Gold.ca.

6 6 MONEY4GOLD HOLDINGS INC RESEARCH REPORT APRIL 20099} VSA CAPITAL INVESTMENT RESEARCH This acquisition will not only help MFGD s international presence but will also add significant marketing, collections, distribution and logistical expertise to the company. Corporate Service Agreement As part of MFGD's rapid expansion, they have recently executed a services agreement with My Gold Envelope (MGE), another precious metals recycling company. Under this agreement MFGD will be providing the following to My Gold Envelope: MGE will have a portion of their customer packages pre-addressed to MFGD's where they will be received by the same staff that receives MFGD packages. These packages will be segmented and then graded in a similar manner to MFGD's and then logged into their back-end system. Upon final refining, they will be sold to Republic Metals under the same terms that they currently received by MFGD (full value of the material) and then they will pay My Gold Envelope a lesser percentage. MFGD will be profiting on the spread between what they receive from Republic and what they pay My Gold Envelope (which is more than MGE receive from their current refining relationship). Essentially this agreement allows MGE to benefit from MFGD's superior cost structure and MFGD profit from servicing MGE's business. Industry Outlook The increase in the recycling of precious metals is a powerful trend that many investors have not actually noticed. Recycling is the second largest source of gold, silver and platinum supply. Because of supply imbalances, it is increasingly significant to the precious metals markets. Recycling accounts for 27% of the global supply of gold. The recovery of gold by recycling has risen from 14 million ounces in 1997 to approx. 30 million ounces worldwide in The recycling of silver and platinum has seen a similar scale of growth over this period. Chart I: Gold Supply Flow Central Banks, 14% Recycled Gold, 27% Mine Production, 59% Source: VSA Capital Every region reported higher levels of gold recycling last year, largely because of profit taking and distress selling by individuals. Western markets saw their scrap supplies exceed the already elevated levels of In the United States and Europe, a combination of the rapid economic downturn, together with a far greater ease of selling old jewellery, partly because of greater advertising by scrap collectors, produced record levels of recycling in each market.

7 VSA CAPITAL INVESTMENT RESEARCH 0 RESEARCH REPORT APRIL The first quarter of 2009 scrap supply has exceeded the already high levels witnessed at the end of last year and this is set to continue. Gold is unusual in that it is both a commodity and a monetary asset. Because it is virtually indestructible, all the gold that has ever been mined still exists above ground in some form or another and, theoretically, the majority of above-ground stocks could easily be mobilised. That is to say that they are in simple, relatively unfabricated form. As a result of this feature, any upward spike in price is often met by the resale of above-ground stock and this is one of the reasons why the gold price is historically less volatile than the majority of other commodity prices. It also explains why gold s forward markets are generally (but not always) orderly. As is the case with most metals, the gold that satisfies demand each year comes both from mine production and from the recycling of metal that has been mined in previous years. Over the past five years, recycled gold, largely from the jewellery market, has represented a quarter of worldwide gold supply, followed by sales of gold by central banks. Recycling of gold and other precious metals is doubly important in the U.S. In this country, recycling accounts for a little less than half of total supply, and has been rising for several years. By trend, more than 50% of all U.S. precious metals production is anticipated to come from recycling within the next five years. Annual demand for gold falls into three main categories, the largest of which is the jewellery market, which was worth $44 billion in Industrial demand for gold is dominated by the electronics sector, but also includes dentistry and other industrial and decorative applications. The final component of demand is investment. Because a significant portion of investment demand is transacted in the over-the-counter market, it does not lend itself to ease of measurement. Mine production The upward trend in annual production is now levelling off, due not least to a considerable slowdown in exploration spending in the late 1990s. Independent analysts are of the belief that mine output will remain flat for the next few years and may even drop slightly. Mining costs have escalated due to significant increases in fuel, energy, labour, and transportation costs. Additionally, global environmental regulations specific to the mining industry have become increasingly stringent over the last decade. One of the results has been a decrease in overall global output in many precious metals derived from mining operations. However demand for precious metals remains constant or has increased (dependent on metal type). Couple this will overall market conditions, and standard supply/demand curves, it becomes easier to understand why precious metal prices have increased significantly over the last 12 months. It is important to note that MFGD also provides recycling services for other precious metals such as silver, platinum and palladium. Recycled Gold Gold is virtually indestructible so that, unless it has been lost, all the gold ever mined still exists. It is also easily recoverable from most of its uses and capable of being melted down, rerefined and reused. It follows that the supply of recycled gold, or scrap, is an important part of the dynamics of the gold market.

8 8 MONEY4GOLD HOLDINGS INC RESEARCH REPORT APRIL 20099} VSA CAPITAL INVESTMENT RESEARCH In the statistics, scrap is defined as being gold that has been sourced from old fabricated products that have been recovered and refined back into bars. It does not include jewellery that has simply been traded in and resold without being re-refined, or resold investment bars and coins. Most recycled gold generated originates from jewellery. Smaller amounts come from recuperated electronics components and, at times, from investment bars and coins. The supply of scrap depends largely on economic circumstances and on the behaviour of the gold price. It is common practice in the Middle East and Asia for customers to trade in one piece of jewellery in exchange for another, and the piece traded in may be melted down rather than simply being resold. But gold can also be sold for cash either if the owner has need of money or if the owner wants to cash in a profit following a rise in the gold price. It follows that scrap supply typically rises in times of economic distress or following a price rise. Investment Demand Chart II: 5 Year Price in USD/oz Source: goldprice.org Gold s use as an investment is rooted in history and derives from its roles as a safe haven, a store of value and a monetary asset. Since gold is not a liability of any government or corporation it does not, unlike currencies, bonds and equities, run any risk of becoming worthless through the default of the issuer. In more recent times its role as an excellent portfolio diversifier as a result of the gold price s lack of correlation with mainstream investments and its role as a currency and inflation hedge have also been recognised.

9 VSA CAPITAL INVESTMENT RESEARCH 0 RESEARCH REPORT APRIL Management The management team has direct marketing expertise. The Company has assembled a strong team with 30 years collective experience in online and offline direct marketing and a proven track record for guiding early-stage businesses to profitability. Scott Frohman - Chairman Scott Frohman joined Marlin Capital Partners in December Prior to joining Marlin Capital Partners, Mr. Frohman served as CEO of Health Benefits Direct. He co-founded Health Benefits Direct and served on the company's board of directors from which its inception in February 2004 through December Mr Frohman also currently serves as the CEO of Options Media Group. Mr Frohman has more than a decade of experience as an entrepreneur and builder of professional early stage businesses. His prior experience includes founding and serving as CEO of National Lead Services, which was acquired by Seisint and spun-off as part of edirect.com, which was later acquired by Equifax. Hakan Koyuncu - CEO Hakan Koyuncu is the co-founder and CEO of Leadcreations.com LLC, an internet marketing and online lead generation company with a focus on technology and innovative strategy, as well as the Director of Options Media Group, also an Internet marketing company. Upon obtaining his Bachelor of Science in business administration with a concentration in marketing, Mr. Koyuncu became director of online marketing for Tel3, a prepaid long distance phone service company. He quickly grew Tel3 s subscriber base to more than 35,000 users, positioning this company as one of the nation s largest prepaid telecommunications platforms. At Tel3, Mr. Koyuncu segregated the company s online marketing efforts into a separate division which eventually was spun off into its own company, Inmar LLC. Recognizing the growing value of Internet marketing and what it had accomplished for Tel3, Mr. Koyuncu, through Inmar, applied its successful online marketing strategies to other companies, thereby transforming a marketing department into a thriving stand-alone business. LeadCreations.com LLC was founded by Mr. Koyuncu in 2003 as yet another spin off of a business model derived from Inmar s online marketing business. Today, it is one of the leading Internet-based lead generation firms. LeadCreations developed its own proprietary technology platform that brings online publishers and advertisers together and tracks and reports campaign performance. Mr Koyuncu s business acumen extended outside of the United States when in 2005 he started one of Turkey s first independent telecommunications companies, Unitel Telecom, which was acquired by another telecom company within two years. Daniel Brauser - CFO Daniel Brauser is a co-founder of Money4Gold and has served in an executive role since the company's inception in the spring of His responsibilities include the development and management of the company's financial reporting policies and procedures, investor relations and overall business development and strategic management. His prior experience includes financial consulting in the ranks of several highly successful startup organizations. Mr. Brauser was co-founder of Health Benefits Direct (symbol: HBDT.OB) where he served initially as the company's Chief Financial Officer and later as Senior Vice President. His corporate responsibilities included a variety of business development and strategic initiatives as well as the development and management of the financial and accounting process of HBDC. Prior to his tenure with HBDC Mr. Brauser served as an integral part of the team responsible for the accounting process and procedures for Omnipoint Media, a specialized internet advertising services company.

10 10 MONEY4GOLD HOLDINGS INC RESEARCH REPORT APRIL 20099} VSA CAPITAL INVESTMENT RESEARCH Prior to joining Omnipoint Media, Mr. Brauser consulted as a data analyst and purchasing agent for Seisint, Inc. a leader in database and technology services. Supporting further initiatives for Seisint, he also worked directly with several state-level government organizations for the procurement of multiple public record databases. Mr. Brauser has Bachelor of Science in Finance from the University of Florida and an MBA from Duke University's Fuqua School of Business. Neil McDermott - Director Mr McDermott serves as a committee member on the Audit Committee. Since 2002, Mr McDermott has been self-employed as a real estate developer in Ireland. From 2002 to 2007, Mr McDermott was non-executive director for Celtic Resources plc, a developer and producer of gold mine projects. Jason Rubin - Director Jason Rubin currently serves as vice president and general counsel for Republic Metals Corp., one of the largest precious metals refineries in the United States. Mr. Rubin grew up in the refining business, as his father founded Republic Metals. Mr. Rubin performs every possible task and gaining insight into all aspects of the precious metals business. Today, Mr. Rubin oversees the financing and trading departments, international operations as well as all legal aspects of the business. His 15 years at Republic give him unparalleled expertise and countless relationships in the precious metals industry. Mr. Rubin is a graduate of the George Washington University School of Business, where he received a degree in finance and international business. He earned a Juris Doctorate from the Nova Southeastern University School of Law. Financials MFGD is well positioned in precious metals recycling market to report strong growth in customer base and revenue. The Company launched its business in Q in test phase with strictly internet marketing. All test marketing results have been regarded as exceptional successes by the company's management. With the completion of this fund raising, MFGD will be ready to proceed with print, TV and radio advertising and achieve meaningful revenue. The financial forecast takes into consideration a $5 million capital infusion during the 2nd quarter of 2009 allowing for a substantial increase (to $2 million) in Marketing Expenses during this period. As the Company reported revenue in the range of $1.5 million for the second half of 2008, we predict for 2010 and 2011 revenue to grow at triple-digit rates. At current growth rates, MFGD could turn profitable in 2009.

11 VSA CAPITAL INVESTMENT RESEARCH 0 RESEARCH REPORT APRIL Valuation There are no listed companies that are directly comparable with MFGD. The company's closest peer is privately-held Cash4Gold. Cash4Gold has served thousands of customers and advertises its business on national television spots and satellite radio. Cash4Gold's marketing spending, estimated at US$3 million per quarter, indirectly benefits MFGD by increasing consumer awareness and the visibility of the precious metal recycling industry. Cash4Gold started in July 2001 with an initial investment of US$30,000, and turned profitable in the same year. It generated its first million in revenue in 2002 with sales of US$3 million and continued its rapid growth with US$4.1 million in revenue in 2003 and more recently US$41 million in revenue in Cash4Gold recently raised US$40 million through venture capital investors and with its already rapid growth, a possible sales forecast for this year could be close to US$100 million. MFGD is using the Internet and other direct marketing tools to reach customers. The company's turnkey relationship with Republic Metals provides access to necessary infrastructure at low variable costs. MFGD also outsources its call centre operations. By outsourcing these activities, the company ensures a low cost structure. In addition, the direct marketing experience of MFGD's management team provides a significant competitive advantage. The value of gold recycling companies is rising, fuelled by increased gold consumption and price momentum. MFGD's business model allows the company to capitalize on the rising demand for recycled precious metals, avoid mining risk and minimize its overhead spending and cost structure. In the 3rd quarter of 2009 profits should start to benefit significantly from the marketing investment, and then very substantially in 2010, following which the growth of the business is assumed to continue at an above-average rate. On very conservative assumptions the market is valuing the company at only twice its NPV. This is based on a minimum raise of US$5m, and a discount rate of 5% on future earnings. We consider, however, that taking into account the company s forecasts, which appear realistic, the company can more than double its EPS. This implies a share price of $ $0.80 on a prospective multiple of around 4. On trading grounds alone a mid-price of $0.75 would thus be our target, looking out to, say, the second half of This would put a value on the whole company of $59m.

12 12 MONEY4GOLD HOLDINGS INC RESEARCH REPORT APRIL 20099} VSA CAPITAL INVESTMENT RESEARCH S.W.O.T. Analysis Strengths Good and experienced management, with extensive knowledge of the marketing industry Weaknesses Limited operating history Need for additional funding Direct relationship with refinery with one of America s largest and most respected precious metal refiners Opportunities Globalisation of business Threats Volatility of gold prices Corporate acquisitions

13 VSA CAPITAL INVESTMENT RESEARCH MONEY4GOLD HOLDINGS INC RESEARCH REPORT APRIL 2009} 13 Principal shareholders % Forthcoming announcements/catalysts Management team Hakan Koyuncu 18.8 Scott Frohman - Chairman Jason Rubin 12.7 Hakan Koyuncu - CEO Daniel Brauser 11.8 Daniel Brauser - COO, CFO Semper Gestion SA 8.3 Neil McDermott - Director Alan S. Hong 6.0 Jason Rubin - Director Scott Frohman 5.1 Neil McDermott 1.9 IMPORTANT NOTICE This research report has been prepared by VSA Capital Limited, for which it has been paid a fee, as corporate finance advisors and arrangers to Money4Gold Inc and is solely for and directed at persons who have professional experience in matters relating to investments and who are Investment Professionals, as specified in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order This research report is exempt from the general restriction on the communication of invitations or inducements to enter into investment activity and has therefore not been approved by an authorised person, as would otherwise be required by Section 21 of the Financial Services and Markets Act 2000 (the "Act"). Persons who do not fall within the above category should return this research report to VSA Capital Limited, 14 Austin Friars, London, EC2N 5NE, immediately. This research report is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. It is being supplied to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any purpose, without out prior written consent. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities. The information and opinions contained in this research report have been compiled or arrived at by VSA Capital Limited (the "Company") from sources believed to be reliable and in good faith but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in the research report constitute the Company's judgements as of the date of the report and are subject to change without notice. The information contained in the report is published for the assistance of those persons defined above but it is not to be relied upon as authoritative or taken in substitution for the exercise of the judgement of any reader. The Company accepts no liability whatsoever for any direct or consequential loss arising from any use of the information contained herein. The company does not make any representation to any reader of the research report as to the suitability of any investment made in connection with this report and readers must satisfy themselves of the suitability in light of their own understanding, appraisal of risk and reward, objectives, experience and financial and operational resources. The value of any companies or securities referred to in this research report may rise as well as fall and sums recovered may be less than those originally invested. Any references to past performance of any companies or investments referred to in this research report are not indicative of their future performance. The Company and/or its directors and/or employees may have long or short positions in the securities mentioned herein, or in options, futures and other derivative instruments based on these securities or commodities. Not all of the products recommended or discussed in this research report may be regulated by the Financial Services and Markets Act 2000 and the rules made for the protection of investors by that Act will not apply to them. If you are in any doubt about the investment to which this report relates, you should consult a person authorised and regulated by the Financial Services Authority who specialises in advising on securities of the kind described. The Company does and seeks to do business with the companies covered in its research reports. Thus, investors should be aware that the Company may have a conflict of interest that may affect the objectivity of this report. The analyst who prepared this report has not and will not receive any compensation for providing a specific recommendation or view in this report. Investors should consider this report as only a single factor in making their investment decision. The information in this report is not intended to be published or made available to any person in the United States of America (USA) or Canada or any jurisdiction where to do so would result in contravention of any applicable laws or regulations. Accordingly, if it is prohibited to make such information available in your jurisdiction or to you (by reason of your nationality, residence or otherwise) it is not directed at you. VSA Capital Ltd. is Authorised and Regulated by the Financial Services Authority