for the converted lsg fans and those thinking abou

Attached is the Chairman's address to the AGM.
Well worth a study.
Note the comment about tax treatment of dividend.
One of the benefits of PDF investments.
LSG should be rewarding as we go forward.
Long term holder.
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Chairman`s Address to Shareholders

LION SELECTION GROUP LIMITED
2002-12-10 ASX-SIGNAL-G
HOMEX -Melbourne

When established, our charter was to provide patient equity capital
to emerging Australian companies. We were not established as an
investment fund, and indeed by virtue of the Pooled Development Fund
Act, are precluded from dealing, limiting any short term profits. We
are restricted to the provision of new capital, and, in return, you,
our shareholders receive tax free capital gains and dividends. It was
therefore with much satisfaction, that in the year under review, we
recorded our first annual profit of $9.3 million, and declared a
maiden dividend. Because our business, is in the buying and patiently
holding securities, long enough for a satisfactory outcome, our
stream of profits from sales, unlike say, a manufacturing business,
will perforce be lumpy. Rates of profit growth will not, even under
ideal circumstances, follow a smooth upward trend. But the pipeline
is now established and the outlook looks rosy.

Shareholders will have seen in the Annual Report, a number of
projects now in production, or preparing for production, and some
with great production potential. These, as they are brought on
stream, or are expanded in scope, will be the source of our future
profits and dividends.

It therefore gives me much pleasure to announce that the Lion Board
met this morning, and resolved to declare a second dividend of 3
cents per share. The dividend will be fully franked, and will be paid
on 21 February next year to those shareholders on the register at the
close of business on the 7th of February, 2003.

While you should seek your own taxation advice, I remind you that, as
a Pooled Development Fund shareholder, you can elect to treat the
dividend as exempt income on which no tax is payable, or to include
the dividend as income in order to utilise the franking credit. That
decision will depend on your own taxing situation - and is the reason
why you should seek your own tax advice.

Shareholders will have noted that a new Management Contract was
signed with the management team, and as I believe that "business is
about people", this continuity of service, is paramount to the
Company's future prosperity. They have shown that they can deliver
the goods, and that they have the patience and the will to succeed.
The Australian Resources Sector has not been, "flavour of the month"
but the quality of our Investments is now starting to attract
attention in the market place.

We have a diversified portfolio, and although we have a predominance
of gold, with a wide geographic spread, through MPI we have a notable
investment in nickel, and through Indophil, and its investment in the
Phillipines at Tampakan, a copper/gold interest in what is a world
class deposit.

Shareholders should also note that through Equinox Resources, we have
our first investment in the Zambian Copperbelt at Lumwana. The
Copperbelt, which I use to include the copper rich sedimentary series
in both Zambia, and the Katangan part of the Democratic Republic of
the Congo, is one of the world's richest copper provinces, which
provided, prior to the troubles in Africa, probably half of the
Western world's supply of copper. The Lumwana Project, now at
Bankable Feasibility Study stage, could be a milestone in African
development returning wealth to those mostly impoverished people.
Through Copperbelt Selection we continue to monitor projects for
acquisition, in this part of Africa.

All the companies in which we have made investments, maintain active
exploration programmes. Their ethos, along with the Board and
Management of Lion, believes that, because mining is by its very
nature, about the depletion of resources, the search for more ore
must be relentlessly pursued. I would like, at this point, to pay
tribute to Geoff Stewart and his team at East African Gold Mines,
who, notwithstanding bringing the North Mara Gold Mine into
production in Tanzania in August 2002, their exploration for more
ore, was not allowed to lag. This persistence led to the discovery of
the quite phenomenal gold intersections reported at Gokona, a
concealed deposit beneath volcanic flows, about a kilometre from
Nyabigena. We can anticipate substantial new resources from such
intersections.

Again, exploration at the Stawell Mine in Victoria, with the doubling
of resources in the Golden Gift ore body to 434,000 ounces of gold at
7 gms per tonne, is a noteworthy exploration success. In my view,
this demonstrates the high prospectivity of the Stawell Field, and
MPI's tenements to the north. Victoria is the Cinderella when it
comes to exploration expenditure, but we should not forget that
Victoria's gold was instrumental in the founding of our Nation.

When I addressed you in 1999, I claimed that Lion had a little less
than 1 million ounces of attributable gold in resources. In 2000, the
figure had grown to 1.4 million, in 2001 to 1.8 million, and today
about 4.4 million, including Tampakan. In anyone's language, this
must be seen as steady growth, for Lion Shareholders. The resources
are, by and large, unhedged, and in a market which shows increasing
interest in gold bullion, this augurs well for the future.

Shareholders may have noted a letter by our Managing Director
published in the Australian Financial Review on 28th November. In my
opinion, this was an important letter, discussing the "rapid decline
of liquidity in the Australian resources sector". It is a concern of
all of us, that so many of the well known mining names have
disappeared by acquisition. There will soon be nothing left for the
international investors to trade, and it must mean the end of
Australia as a leading global mining finance centre. It is beyond
belief that the Australian Stock Exchange, which has over the years,
reaped a fortune from the listing and trading of gold stocks, should
have elected to remove the Gold Index, but is indicates the extent of
the decline, and almost total lack of interest on the part of fund
managers, in the junior miners and explorers.

How can this be? Over 5 years we have seen a world wide contraction
of funds spent on exploration. In 1997, world wide, some US$5.2
billion was spent. By 2001, this had contracted by 58% to US$2.2
billion. Certainly the Bre-X affair, like the Poseidon affair some 25
years earlier, damaged the explorers credibility, but there is, I
suspect, another element to do with commodity prices, and the
"Licence to Mine".

The major miners, focussing on the long term decline in commodity
prices in real terms, being concerned about over production as a
cause, rather than a natural consequence of every increasing usage,
and thereby lower costs, sought to slow down exploration. They did
this by slashing their exploration staff, and their budgets, and
becoming more and more risk averse.

Initially it seemed as though they would use, what I used to call the
"Teck Model", and help finance the juniors into exploration, by joint
ventures or corporate investment. Then the "License to Mine" and
"Sustainability" became an issue, prompted by our Industry's
generally unfavourable image, and prodding by the NGO's.

The creation of whole new departments to manage these important long
term survival issues was another deduction from the bottom line, and
as a consequence, and in my experience, it has been ever thus, the
exploration budget is cut again. Funds for the "Treck Model" of
junior support were slashed, and we now see the snowball effect, and
the disappearance of Australia as a leading global mining finance
centre.

How do we regain our position? I have said, and written this, in many
forums. It is a national issue, and in my opinion, some Government
initiative is called for. As a punishment for the Poseidon boom, we
lost much of our tax deduction status, designed to promote now
initiatives in exploration. Unlike a major producer, the small
explorer has no income against which to claim a deduction for
exploration. It is my considered opinion that either the
re-establishment of Section 77D, granting the investor an immediate
tax deduction for new subscribed capital, or something on the lines
of the Canadian model of "Flow Through" funding is imperative if we
are to stop the rot.

For the moment, Lion stands to benefit, as Australian listed and
unlisted explorers come to us looking for seed capital, and mezzanine
finance, and for the moment the demand is great. If the rot should
persist, and the entrepreneurial geologist decides it is all too
hard, it could be a generation, before the Nation finally demands
something to be done to restore our standard of living, and to
rediscover that mineral exports mean foreign exchange and prosperity.

Lion can play a key role by demonstrating, not only in Australia, but
also in Toronto and London, that Australian companies can deliver the
goods, and to the Government, that we need a junior sector to make
our investment selection. It must never be forgotten that most
exploration will fail, and the ability to select the winners is a
technical skill possessed by Lion management.

My colleagues on the Board have asked me to stand again for
re-election. I am conscious of the fact that this is the third time
of asking, pursuant to a Special Resolution. There is a growing view
that experience, rather than age is a consideration in such matters,
and I am reminded that Geoff Stewart and I are of a similar age. I am
confident I still have a contribution to make.

In conclusion, I must express our thanks to Robin Widdup and his
colleagues. They have performed extremely well with what is now, a
much more complex business to manage. The management team all sit on
various boards of the investee companies, and as development
proceeds, this brings them much greater responsibility. The job is
being well done.

Finally to my colleagues on the Board, and to you our Shareholders, I
must say thank you for your support throughout the year.


E W J Tyler
CHAIRMAN