silver_initiating_bcm cdm fvi slw

Matthew O’Keefe, M.Sc. , MBA, (416) 943-6705; [email protected]

Raj iv Chai l – Assoc ia te , (416) 943-6430; [email protected] Rajb i r Gi l l – Assoc ia te , (416) 943-6729; [email protected]

M E T A L S & M I N I N G

October 14, 2009 Silver

More Precious Than Ever

We are initiating coverage on:

Bear Creek Mining Corp. Recommendation: Buy (S) Target: C$5.20

Coeur d’Alene Mines Corp. Recommendation: Market Perform Target: C$28.00

Fortuna Silver Mines Inc. Recommendation: Buy Target: C$2.30

Silver Wheaton Corp. Recommendation: Buy Target: C$19.00

During the past twenty-four months, Cormark Securities Inc., either on itsown or as a syndicate member,participated in the underwriting ofsecurities and/or provided financialadvice regarding the stock marketinsight and financial analysisregarding potential transactions forthese companies Disclosure statements located at the back and inside back cover

Unless otherwise denoted, a l l f igures in US$ We are ut i l iz ing a $0.90 US/CAD exchange rate

The past year has seen significantly increased interest in precious metalsand while gold makes the headlines, we see equal opportunities in itssister precious metal, silver. In the near term, silver offers as attractive an investment as gold, with ETF growth and performance at record highs. In the longer term, we see continued strength in the demand as industry continues to increase its use of silver in electronics and new technologies. Silver equities can offer much greater gains than metal investment and tothis end, we are initiating coverage on four well-managed companies that we believe give investors excellent leverage to growth and continuedstrength in the silver price.

Established Producers: Size matters and being the biggest players provide investors with trading liquidity, geographic diversification and M&A-driven growth. Our top name in this subgroup is Silver Wheaton for the lower-risk nature of its silver streaming model, the high quality of its contracted projects and its significant growth profile. Coeur d’Alene is not cheap but remains well positioned to move into a top spot over the longer term.

Growing Producers: While the established producers offer lower risk, emerging producers offer extra torque through stronger growth profiles and larger benefit from smaller acquisitions or expansions. In this category we favour Fortuna Silver Mines for its proven management and operating team, rapidly growing production profile and leverage to the silver price.

World-Class Development Projects: Large silver deposits are rare andhighly sought after by juniors and seniors alike. Because of their size, these investments offer excellent leverage to the price of silver and valuation upside as they pass development milestones. In this space, we favour Bear Creek Mining and its world-class Corani project. The project, located in mine-friendly Peru, has progressed to the feasibility stage.

OCTOBER 14, 2009 MATTHEW O’KEEFE 416·943·6705; ASSOCIATES - RAJIV CHAIL 416·943·6430; RAJBIR GILL 416·943·6729

Table of Contents

Introduction ......................................................................................................................... 1

Silver Demand – More Precious Than Ever ....................................................................... 2

Silver Supply – Changing Sources ..................................................................................... 4

Silver Price – As Good As Gold .......................................................................................... 5

Investing In Silver Equities.................................................................................................. 6

Bear Creek Mining. ........................................................................................................... 10

Coeur D’alene Mines Corp................................................................................................ 17

Fortuna Silver Mines Inc. .................................................................................................. 24

Silver Wheaton Corp......................................................................................................... 30

Risks To Target................................................................................................................. 35


1

Introduction The past year has seen increased interest in precious metals as investors move to build

a balance of these safe haven metals in their portfolios. In particular, with gold reaching record level, silver and silver equities have followed suit, performing exceptionally well recently.

Figure 1 Silver Price And Silver Equities

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Sources: Cormark Securities, Bloomberg

While gold makes the headlines, we see equal opportunities in its sister precious metal, silver. In the near term, silver is as attractive an investment as gold with ETF growth and performance at record highs. In the longer term, we see continued strength in demand as industry continues to increase its use of silver in electronics and embraces new uses such as photosensitive tints, solar cells and as an anti-bacterial agent in textiles. In this piece, we offer a brief overview of the market for silver and outline our investment strategies to take full advantage of the sector, from an explorer to a large-cap producer. To that end, we are initiating coverage on four well-managed companies that we believe give investors excellent leverage to growth and continued strength in the silver price. These include

1) Bear Creek Mining • Recommendation: Buy (S); Target Price: C$5.20

2) Coeur d’Alene Mines • Recommendation: Market Perform; Target Price: C$28.00

3) Fortuna Silver • Recommendation: Buy; Target Price: C$2.30

4) Silver Wheaton • Recommendation: Buy; Target Price: C$19.00


2

Silver Demand – More Precious Than Ever Silver is very much an industrial metal. Over 60% of silver produced is used for

industrial applications and photographic film which equates to about 550 MMoz annually (see Figure 2). By comparison, only about 14% (16.6 MMoz) of gold production is used in industrial applications. The advent of digital cameras has rapidly eroded the demand for silver for use in photography such that in 2008, the silver demand for photographic films and chemicals dropped by a record 20 MMoz. Despite the steady erosion on the photographic side, the overall demand for the metal has remained fairly constant as new industrial uses exploit the metal’s desirable qualities; malleability, electrical conductivity, reflectivity, photo-sensitivity and anti-bacterial properties. Indeed, the economic crisis interrupted six consecutive years of the demand growth of ~5% per year CAGR, which more than offset the loss from photography. As the global economy recovers, so tooshould the steady growth in the industrial demand.

Figure 2 Historic Fabrication Demand (’000 Ag ounces)

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Indus trial Applications Photography JewellerySilverware Coins De-HedgingInves tm ent

Source: GFMS World Silver Survey


3

Figure 3 Current Silver Fabrication Demand (2008)

Photography12%

Jewellery18%

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Source: GFMS World Silver Survey

As a precious metal, silver is used extensively in jewelry and silverware, which makes

up a relatively steady 24% of the total demand. The demand declined in 2008 as a result of the economic crisis but it too should increase with the economic recovery.

The recent bright spot for the silver demand is coinage and investment, which has jumped on investor and ETF buying. In 2008, 64.9 MMoz of silver production went into coinage, up from 39.7 MMoz in 2007. This was mostly driven by a desire for investors to find a safe haven during the financial crisis and a surge in the Indian demand as coins and bars replace a historic preference for jewelry. ETFs saw a dramatic increase in holdings as well (see Figure 4), with total bullion holdings increasing by 93 Moz to 265 MMoz.

Figure 4 Silver ETF Holdings By iShares

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The dual nature of silver, as both an industrial and investment metal, contributes to its fairly consistent demand. And while silver used in investment is a relatively small portion of the whole, it is this segment that is chiefly responsible for the current price strength of the metal and its price volatility.


4

Silver Supply – Changing Sources Mine production has grown consistently at about 3% a year over the past decade with

record production of 680 MMoz in 2008. While primary silver mines are important, contributing about 30% to production, the bulk of silver is mined as a by-product of basemetal and gold mines. Besides new production, silver also enters the market as recycled scrap and central bank sales (see Figure 5).

Figure 5 Silver Supply Remains Fairly Constant

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Source: GFMS World Silver Survey From 2007 to 2008, production growth was driven by new production from

Sumitomo’s San Cristobal mine in Bolivia, which added 14 MMoz, and Kinross’ Kupol mine in Russia, which added over 5 MMoz. Additional production also came from the ramp-up of Coeur’s San Bartolome mine in Bolivia, Pan American Silver’s Alamo Dorado and Goldcorp’s Penasquito projects in Mexico. Hochschild added 6 MMoz from its Pallencata and Arcata mines. Offsetting a portion of this new supply was the reduction in by-product silver from base metal operations (mostly copper) and the winding down of older mines such as Coeur’s Rochester Mine, Barrick’s Eskay Creek and Kinross’ La Coipa mine. For 2009, mine production is expected to be flat at around 680 MMoz of silver.

During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities for Barrick Gold Corporation


5

Silver Price – As Good As Gold Silver has been an excellent performer in 2009, rising over 50% since January. During

this period, the gold:silver ratio has tracked its way down from 75 to settle around 60,which is close to the long-term average of 65 (see Figure 6).

Figure 6 Historical Gold To Silver Price Ratio

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Sources: Cormark Securities, Bloomberg In effect, the silver price has been catching up to gold, which started its recent run

toward and now above $1000/oz last summer when the financial crisis took hold. Going forward, we expect the ratio to be more tightly constrained between 50 and 70 as the increased interest in silver as a precious metal forms a tighter link with the gold price. As such, our silver price forecast is driven off our gold price forecast at a LT average of 60x (see Figure 7). We expect silver will continue to be volatile, driven by both the industrial and investment demands.

Figure 7 Precious Metals Price Deck

2008A Q1A Q2A Q3E Q4E 2009E 2010E 2011E 2012E LT

Silver Price (US$/oz) $16.91 $12.65 $13.72 $14.65 $17.00 $14.51 $15.50 $13.75 $13.75 $13.75Gold Price (US$/oz) $873 $909 $921 $960 $950 $935 $950 $825 $825 $825

Gold:Silver Ratio 51.6 71.9 67.1 65.5 55.9 64.5 61.3 60.0 60.0 60.0

Lead Price (US$/lb) $0.93 $0.53 $0.68 $0.87 $0.80 $0.72 $0.80 $0.80 $0.70 $0.65Zinc Price (US$/lb) $0.85 $0.54 $0.68 $0.79 $0.80 $0.70 $0.85 $0.90 $0.80 $0.70

2009E



6

Investing In Silver Equities An Exercise In Volatility The silver market is smaller than the gold market, and as a consequence, tends to be more

volatile. Adding to the challenge is that silver is most commonly found as a by-product of other metal production such as copper, lead or gold. Silver deposits that do not contain any base metals do exist but they tend to be small in terms of deposit size and production.In any given year, about 70% of silver production is a by-product of base metals or gold. Due to the by-product nature of silver and the dearth of primary silver mines, silver companies tend to be an agglomeration of numerous mines. As a result of these factors, it can be difficult for investors to find companies with pure or high leverage to silver prices.On the other hand, companies with several assets or silver-dominant assets can benefit from a small component of by-products as they bring down the cash cost of producing silver. Valuations can be affected too. When the co-product is gold, the high multiples applied to gold companies may be applied. If it is lead or copper, the multiple may be dragged down toward that of base-metals.

Investment Framework Keeping the importance of metal split in mind, we look at silver equity investments within a framework of successful precious metals companies as follows:

1) Established Producer: Size matters and being the biggest players providesinvestors with trading liquidity, operational and geographic diversification and M&A-driven growth. These companies tend toward the lowest risk and highest leverage to commodity price. They may also have the purchasing power to buy and develop the best development projects in an effort to claim the title of the world’s largest silver producer.

2) Growing Producer: While the dominant producers offer lower risk, emerging producers can offer extra torque through stronger growth profiles and bigger benefit from smaller acquisitions or expansions. The best have proven themselves as solid operators in the development or expansion of assets and boast a highly prospective land package. The land package is particularly important in silver mining because many deposits are relatively small such that a central mill is often used to process ore from a number of veins/deposits, which would provide a cost advantage over a company madeup of piece-meal operations all over the world.

3) World-Class Exploration/Development Project: A company that, through exploration success and a bit of luck, has a rare world-class silver project with size and favourable operating costs that the market or a corporate will eventually have to pay a premium for. This is the tried and tested model of the mega project. This type of project is a sure win in any commodity, but that is amplified in the silver market because of the natural scarcity of this type of deposit.


7

Initiating Coverage In Figure 8 below, we present our targets and recommendations for four names that we

believe stand out for quality within our silver equity investment framework. Figure 8 Coverage List

Company SymbolShare

Price (C$)

Market Cap

($MM) RatingTarget

Price (C$)Implied Return

2010E CFPS ($)

2010E P/CFPS

NAVPS (C$) P/NAVPS

Senior ProducerSilver Wheaton SLW $14.74 $4,475.0 Buy $19.00 29% $0.83 15.9x $11.74 1.3xCoeur D' Alene CDM $24.67 $1,674.1 Mkt. Pfm $28.00 13% $2.31 9.6x $16.21 1.5x

Junior ProducerFortuna Silver Mines FVI $1.64 $140.0 Buy $2.30 40% $0.15 9.7x $2.33 0.7x

Development StageBear Creek Mining BCM $4.00 $203.7 Buy (S) $5.20 30% NA NA $5.20 0.8x


Valuation Methodology Our valuations incorporate the silver price forecasts noted previously and a Canadian dollar exchange rate of $0.90. Our valuations for exploration and junior producers arebased on a longer-term net asset value (NAV) approach, with an adjusted multiple-based development and/or political risk. For established producers, it is based on a combination of NAV and cash flow multiples associated with precious metals companies. In our comps tables in Figure 9, we have shown our forecasts for our current coverage universe and, for comparative purposes, other notable silver and precious metals companies based upon consensus forecasts. We provide a brief summary of each company, our investment thesis and a valuation in the next section.


8

Figure 9a Silver Comparable Company Analysis

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Group I: Top-Tier ProducerFresnillo Plc FRES-LN $14.81 $9,557 $175 $4 $9,386 36,889 $1.30 NA $254 675 2,568 $13.90 $3.66 $0.44 30.0x NR NA NR NASilver Wheaton SLW $14.74 $4,475 $340 $150 $4,285 17,374 $3.95 24% $247 861 1,649 $4.98 $2.60 $0.83 15.9x $11.74 1.3x $19.00 29%Pan American Silver PAA $26.71 $2,097 $37 $0 $2,060 27,000 $6.00 NA $76 269 464 $7.65 $4.44 $2.16 11.1x NR NA NR NAHochschild Mining HOC-LN $5.51 $1,526 $59 $300 $1,767 29,941 $7.47 NA $59 114 164 $15.48 $10.76 $0.61 8.1x NR NA NR NASilver Standard SSO $23.00 $1,484 $53 $107 $1,539 3,000 $6.08 NA $513 287 1,779 $5.36 $0.86 $1.03 20.2x NR NA NR NACoeur D' Alene CDM $24.67 $1,674 $25 $231 $1,880 24,220 $80.18 7% $78 404 945 $4.65 $1.99 $2.31 9.6x $16.21 1.5x $28.00 13%Hecla Mining HL-N $5.36 $1,140 $57 $42 $1,125 10,500 $6.00 NA $107 189 404 $5.96 $2.78 $0.33 14.4x NR NA NR NAAverage (Group I) $15.85 $191 $8.28 $3.87 15.6x 1.4x 21%

Group II: Mid-Tier ProducerSilvercorp Metals SVM $5.50 $804 $55 $0 $749 6,312 $4.23 NA $119 NA 481 NA $1.56 $0.25 20.0x NR NA NR NAFirst Majestic Silver FR $3.05 $226 $21 $5 $210 4,612 $4.90 NA $46 46 278 $4.53 $0.76 NA NA NR NA NR NAMinera Andes MAI $0.70 $162 $23 $32 $171 11,500 $5.00 NA $15 48 134 $3.56 $1.28 $0.18 3.5x NR NA NR NAEndeavour Silver EDR $3.27 $168 $21 $1 $147 2,700 $7.50 NA $55 10 62 $15.47 $2.37 $0.39 7.5x NR NA NR NAFortuna Silver Mines FVI-V $1.64 $140 $34 $1 $107 1,580 $2.96 51% $68 20 74 $5.29 $1.45 $0.15 9.7x $2.33 0.7x $2.30 40%Excellon Resources EXN $0.67 $104 $1 $0 $103 1,972 $10.90 NA $52 NA 14 NA $7.22 NA NA NR NA NR NAGreat Panther GPR-T $0.89 $70 $2 $5 $73 2,121 $6.50 NA $34 NA 19 NA $3.85 NA NA NR NA NR NAImpact Silver IPT-V $0.87 $38 $4 $0 $34 894 $7.59 NA $38 NA 5 NA $6.98 NA NA NR NA NR NAAverage (Group II) $6.20 $53 $7.21 $3.18 10.2x 0.7x 40%

Group III: DeveloperMAG Silver MAG $6.25 $277 $32 $0 $245 NA NA NA NA NA 99 NA $2.47 NA NA NR NA NR NAAquiline Resources AQI $5.47 $378 $15 $1 $364 NA NA NA NA NA 751 NA $0.49 NA NA NR NA NR NABear Creek Mining BCM-V $4.00 $204 $8 $37 $233 NA NA NA NA 258 633 $0.90 $0.37 NA NA $5.20 0.8x $5.20 30%Ecu Silver Mining ECU $0.72 $183 $0 $21 $204 NA NA NA NA NA 431 NA $0.47 NA NA NR NA NR NAAlexco Resources AXR $2.99 $106 $8 $0 $98 NA NA NA NA NA 18 NA $5.58 NA NA NR NA NR NAOrko Silver OK-V $0.96 $99 $5 $0 $94 NA NA NA NA NA 66 NA $1.43 NA NA NR NA NR NAAverage (Group III) NA NA $0.90 $1.80 NA 0.8x 30%

Group IV: ExplorationRevett Minerals RVM-T $0.16 $17 $3 $5 $19 NA NA NA NA 12 306 $1.56 $0.06 NA NA NR NA NR NARio Alto Mining RIO-V $0.41 $15 $5 $0 $9 NA NA NA NA NA 1 NA $10.44 NA NA NR NA NR NASilver Bear Resources SBR-T $0.50 $17 $15 $0 $2 NA NA NA NA NA 31 NA $0.05 NA NA NR NA NR NAAverage (Group IV) NA NA $1.56 $3.52 NA NA NA

During the past 24 months, Cormark Securities Inc, either on its own or as a syndicate member, participated in the underwriting of these securities*Bloomberg consensus numbers for CFPS, company guidance/annualized rates used for production and cash costs. Production and Resources calculated based on a $825/oz Au and $12/oz Ag price**Reserves and Resources are on a attributable basis

CAPITALIZATION PRODUCTION RESERVES & RESOURCES VALUATION & TARGET

Silver Price Deck$14.26/oz (2009)$14.75/oz (2010)$12.50/oz (Long Term)Discount Rate: 5%+

In USD unless indicated otherwise

Sources: Bloomberg, Cormark Securities


9

Figure 9b Gold Comparable Company Analysis

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Group I: Top-Tier ProducerBarrick ABX $41.36 $39,389 $5,927 $5,126 $38,588 7,407 $476 5% $5,210 691.9 2,633 $55.77 $14.66 $2.89 13.9x $27.67 1.5x $54.00 31%Newmont NEM-US $49.22 $22,873 $544 $3,308 $25,637 5,300 $420 NA $4,837 91.0 127.0 $281.72 $201.87 NA NA NA NA NA NAGoldcorp G $44.40 $31,424 $866 $863 $31,421 2,403 $313 15% $13,074 46.3 89.3 $678.92 $352.05 $1.61 26.8x $19.57 2.3x $43.00 -3%Kinross K $24.42 $16,435 $586 $922 $16,771 2,260 $405 6% $7,422 45.6 85.4 $367.56 $196.30 $1.52 15.6x $16.31 1.5x $28.00 15%Average (Group I) $403 $7,636 $346.00 $191.22 18.7x 1.8x 14%

Group II: Mid-Tier ProducerAgnico-Eagle AEM $75.47 $11,406 $174 $485 $11,717 599 $310 40% $19,569 18.1 27.0 $648.90 $434.12 $2.89 25.3x $40.96 1.8x $70.00 -7%Yamana YRI $13.09 $9,294 $94 $574 $9,774 1,139 $227 6% $8,584 19.4 46.9 $503.79 $208.39 $0.80 15.9x $7.95 1.6x $14.50 11%Eldorado ELD $12.78 $4,943 $136 $154 $4,961 357 $310 36% $13,888 12.7 39.0 $392.10 $127.25 $0.59 21.1x $6.56 1.9x $14.25 12%IAMGold IMG $15.42 $5,464 $301 $45 $5,208 916 $443 5% $5,689 12.4 34.1 $419.75 $152.71 $0.91 16.4x $10.72 1.4x $15.50 1%Red Back Mining RBI $13.94 $3,099 $148 $0 $2,952 368 $385 16% $8,026 4.6 8.3 $640.74 $355.62 $0.97 13.9x $7.47 1.9x $13.50 -3%Average (Group II) $335 $11,151 $521.06 $255.62 18.5x 1.7x 2%

Group III: Small Tier ProducersDundee Precious Metals DPM $3.96 $374 $50 $23 $347 190 $252 26% $1,830 2.9 7.9 $119.82 $44.00 C$0.28 14.3x $4.48 0.9x $4.25 7%High River HRG $0.43 $270 $22 $131 $379 293 UR UR UR 2.4 4.3 $159.49 $88.60 UR UR UR UR UR URAllied Nevada Gold Corp. ANV $11.48 $807 $111 $6 $702 81 $426 35% $8,689 1.1 11.9 $614.34 $58.98 $0.50 22.1x $16.52 0.7x $16.50 44%Mineral Deposits MDM $0.91 $497 $20 $60 $536 62 $410 48% $8,578 1.6 3.5 $328.99 $152.69 A$0.09 8.9x $0.66 1.4x $0.90 -1%Dynasty Metals DMM $3.77 $117 $35 $0 $83 37 $252 66% $2,244 2.9 6.0 $28.46 $13.86 $1.16 3.2x $14.65 0.3x $10.00 165%Centamin Egypt CEE $1.91 $1,855 $59 $0 $1,796 33 $417 80% $53,966 6.4 13.2 $280.62 $135.96 $0.12 15.7x $1.65 1.2x $2.25 18%San Gold Corp SGR $3.01 $750 $39 $22 $733 33 UR UR UR 0.3 1.6 NM $458.08 UR UR UR UR UR URAverage (Group III) $351 $15,061 $255.29 $136.02 12.8x 0.9x 47%

Group IV: Exploration and DevelopmentAlexis Minerals AMC $0.48 $71 $8 $0 $63 UR UR UR UR 0.2 0.6 $308.64 $110.27 UR UR UR UR UR URGabriel Resources GBU $2.20 $545 $56 $0 $489 UR UR UR UR 10.1 15.8 $48.46 $30.98 UR UR UR UR UR URGuyana Goldfields GUY $4.88 $308 $28 $0 $280 UR UR UR UR 0.0 5.4 NM $51.85 UR UR UR UR UR URFronteer Group FRG $4.92 $566 $154 $0 $412 0 NA NA NA 0.0 6.1 NM $68.09 NA NA $4.93 1.0x $5.00 2%Linear Gold LRR $2.62 $83 $30 $0 $53 UR UR UR UR 0.6 2.5 $88.19 $21.35 UR UR UR UR UR URPerseus Mining Ltd PRU-AU $1.46 $414 $59 $0 $356 0 NA NA NA 2.1 8.4 $166.14 $42.27 NA NA A$1.98 0.8x A$2.00 37%Canplats Resources CPQ $2.30 $147 $5 $0 $142 0 NA NA NA 0.0 4.0 NM $35.61 NA NA $4.33 0.5x $4.25 85%Average (Group IV) NA NA $152.85 $51.49 NA 0.8x 41%

During the past 24 months, Cormark Securities Inc, either on its own or as a syndicate member, participated in the underwriting of these securities*Bloomberg consensus numbers for CFPS, company guidance/annualized rates used for production and cash costs. Production and Resources calculated based on a $825/oz Au and $12/oz Ag price**Reserves and Resources are on a attributable basis. Production includes Gold Equivalent oz.

CAPITALIZATION PRODUCTION RESERVES & RESOURCES VALUATION & TARGET

Gold Price (Avg.):2009E: $900/oz2010E: $950/oz2011E+: $825/ozDiscount Rate: 5%+

In USD unless indicated otherwise



10

Bear Creek Mining. (BCM - C$4.00, TSXV)

Recommendation: Buy (S) Target Price: C$5.20

Figure 10 Statistics & Estimates Current Price C$4.00 Shares Outstanding (MM)52 Wk High C$4.15 Basic52 Wk Low C$0.57 DilutedCash (MM) $8.1 Mgmt. & Dir.Total Debt (MM) $37.1 Market Cap.NAVPS C$5.20 FloatP/NAV 0.8x EVDividend $0.00 ReservesDividend Yield 0% Total Resource

EV/Resource

56.659.417.4

C$156.9

$0.36

C$226.4

633 MMoz

$229.9258 MMoz

Sources: Cormark Securities, Company Reports

Figure 11 Price Chart

Source: BigCharts (Oct. 13/09)

Advanced Project Pipeline Charging Ahead

Bear Creek is currently developing two silver projects in southern Peru. The country remains a top jurisdiction for its favourable attitude towards mining and transparent permitting process.

Bear Creek’s premier asset is Corani, a world-class deposit with over 330 MMoz of contained silver. A pre-feasibility study demonstrated the project could produce 10 MMoz of silver per year but we expect the full feasibility will produce at a higher rate.

The company’s second major asset is Santa Ana, which contains over 50 MMoz of resource. A scoping study shows that the low-cost project could be fast-tracked to production by 2012 producing 4.6 MMoz of silver per year.

With the district still open to exploration, we could see upward revisions here as the scope of the project expands to satellite deposits.

The company recently renegotiated terms with Rio Tinto regarding the consolidation of ownership at Corani and has agreed to pay Rio Tinto $45 MM over four years for the remaining 30% of the project.

The Company will need to raise about $20 MM to satisfy its remaining 2009 and 2010 payments to Rio Tinto as well as continue its development activities.

We are initiating coverage on Bear Creek Mining, with a Buy recommendation and 12-month target of C$5.20 based on a 1.0x multiple to NAV.


11

Company Profile Bear Creek Mining is engaged in the exploration and development of precious metals

projects in the emerging mineral districts of Peru (see Figure 12). The company has conducted a feasibility study on its flagship Corani Project, which has an outlined resource of 327 MMoz silver. Its second major asset, the Santa Ana project, is also well-advanced with a 72 MMoz resource and recently completed scoping study. In total, Bear Creek has outlined a mineral inventory of 400 MMoz of silver with the potential to produce 20 MMoz of silver per year. Management has extensive experience in exploration, development and mining in Peru and continues to aggressively move these projects toward production. The company is unique in that it gives investors exposure to a desirable world-class asset being developed by a junior miner, making BCM an attractive takeover candidate.

Figure 12 Bear Creek’s Assets In Peru

Source: Bear Creek Mining

Corani – A Company Maker

Bear Creek’s flagship asset, the Corani project, is located in the high Andes at elevations ranging from 4,800 m to 5,200 m, midway between the cities of Cusco and Puno. Exploration work and intensive drill campaigns since 2005 have resulted in the definition


12

of three adjacent open-pittable deposits that collectively contain 327 MMoz of silver, 3.97 BB pound of lead and 2.46 BB pound of zinc (see Figure 13). The majority of the existing resource is centered within the Corani Este zone, with further exploration potential open to the south (see Figure 14). Bear Creek recently completed a pre-feasibility study that showed the resource could support a robust, open-pit project processing 15,000 tpd of ore for over 27 years. Such an operation would produce 10 MMoz of silver a year over the first six years and 6.4 MMoz per year over the life of mine. Processing of the ore will be by conventional flotation recovery methods to produce silver-bearing lead and zinc concentrates. A relatively low stripping ratio of 1.56:1 along with lead and zinc by-products and modest silver recoveries of about 75% result in a cash-cost of just $2.81/oz. Startup capital is estimated to be $339 MM. The scale of this project outlined in the pre-feasibility study is financeable by a junior but we submit that a larger, more capital-intensive project could be contemplated by a potential partner, buyer or ambitious Bear Creek. The company is moving ahead with a feasibility-level study on the project, which could be expected in Q3/10. Various throughputs will be looked at as well as metallurgical optimization work, which could improve silver recoveries.

Figure 13 Corani Resource

CategoryTonnes

(000s) Ag g/t Pb % Zn %Silver

(MMoz)Lead

(MMlbs)Zinc

(MMlbs)Ag Eq

(MMoz)Proven 27,957 70.2 1.08 0.59 63 666 364 118Probable 111,666 54.3 0.9 0.43 195 2,216 1,059 369Total 139,623 57.47 0.94% 0.46% 258 2,881 1,422 487Measured 10,791 16.7 0.43 0.45 6 102 107 17Indicated 99,626 20.6 0.45 0.39 66 988 857 165Total 110,417 20.22 0.45% 0.40% 72 1,091 964 182Inferred 34,215 32.4 0.54 0.34 36 407 257 71Total 34,215 32.36 0.54% 0.34% 36 407 257 71



13

Figure 14 Corani Project


Cash Calls From Rio Tinto In March 2008, Bear Creek entered into an agreement to consolidate the ownership of Corani by purchasing the remaining 30% interest from Rio Tinto. In consideration for this, BCM agreed to pay Rio Tinto a total of $75 MM through issuing of shares, and cash payments. In February 2009, at the depths of the credit crisis, Bear Creek renegotiatedthe terms of the agreement to extend its payment deadlines. The revised payment schedule is as follows:

• $5 MM due December 31, 2009

• $10 MM due December 31, 2010

• $10 MM due September 30, 2011

• $15 MM due June 30, 2012

Bear Creek has agreed to make additional payments of $1.1 MM upon signing of the


14

amended document and $1.1 MM on January 10, 2011. Thus the purchase of the 30% interest costs BCM $77.2 MM, of which $35 MM has already been paid. At present, Bear Creek has about $8 MM in the treasury and we believe the company needs about $20 MM to meet ongoing development and corporate costs through the end of 2010.

Santa Ana – A Company Starter

The company also owns 100% of the Santa Ana project, located about 200 km to the south of Corani and near the border with Bolivia. Since discovering the deposit in 2004, Bear Creek has built a measured and indicated resource of 66.8 MMT grading 45.5 g/Tsilver for 97.7 MMoz of contained silver. In April, the company produced a scoping study that determined that the deposit would be amenable to a 10,000 tpd heap leach operation averaging 4.6 MMoz per year over 11.8 years. Recoveries at 70% would be reasonable to produce a silver dore but with no zinc or lead by-products, cash costs are in the $7.50/oz range. Capital costs are expected to be about $51 MM, benefiting from the low strip ratio and simple heap leach infrastructure. As a result, Santa Ana has the capacity to become a small but robust silver producer in a short time frame. With only 75% of the resource being utilized in the study and the deposit remaining open to the north and at depth, there is potential to grow the operation and mine life further. Drilling is ongoing and a feasibility study is expected to be completed by mid-2010.

Figure 15 Santa Ana Resource Estimate

CategoryTonnes

(000s) Ag g/t Pb % Zn %Silver

(MMoz) Lead

(MMlbs)Zinc

(MMlbs)Ag Eq

(MMoz)M&I 66,837 45.5 0.33 0.57 98 481 839 170Inferred 25,454 50.6 0.36 0.52 41 202 292 68Total 92,291 46.87 0.34% 0.56% 139 683 1,131 238


Outlook Production decisions have not been made for either project, but work to date is advanced

enough and results are robust enough to suggest that both projects will eventually be built. Despite being further along the development path than Santa Ana, the larger, more complex Corani project will require a longer time frame for final engineering and development. Similarly, the smaller-size, lower-complexity and very low capital cost of Santa Ana should allow it to see production before Corani.

Our model for Santa Ana is based on the scoping study assuming mine production of 5MMoz per year for 11 years starting in 2012. Similarly, our Corani model is based on the recently completed feasibility study but assumes a larger, 25,000 tpd operation producing 13 MMoz of silver over a 16-year mine life, starting in late 2013. We have not factored in additional ore that will likely come from further drilling on either of the open deposits.The result is an impressive growth and production profile more akin to a major producer than junior startup (see Figure 16). As Bear Creek continues to advance through final feasibility, it becomes more attractive as a takeover target for existing silver or base metal producers.


15

Figure 16 Bear Creek Production Profile

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

AgE

q Pr

oduc

tion

(000

oz)

2.00

3.00

4.00

5.00

6.00

7.00

Cas

h C

osts

($/o

z)

Corani B.Metals (AgEq) Corani Santa Ana Cash Costs ($/oz)

Source: Cormark Securities

Valuation Based on our conceptual cash flow models for both Corani and Santa Ana being discounted at 10%, our sum-of-parts NAV for Bear Creek Mining is C$343.6 MM or C$5.20 per share (see Figure 17). This includes an anticipated $20 MM equity financing in the next few months to cover the costs of completing the feasibility studies and making the Rio Tinto payments. Currently, the company trades at 0.8x our NAVPS of C$5.20 per share. We note that the company offers excellent leverage to the silver price and upside potential as it passes development milestones (see Figure 18).

Figure 17 Bear Creek Mining’s Net Asset Value

Mining Assets Ownership Discount Rate $MM $/shareCorani 100.0% 10.0% $235.1 $3.56Santa Ana 100.0% 10.0% $84.4 $1.28Total Mining Assets $319.5 $4.83Financial AssetsCash & Cash Equivalents $26.9 $0.41Total Debt (Rio Tinto Payments) $37.1 $0.56Total Financial Assets $(10.2) $(0.16)Net Asset Value (US$) $309.2 $4.68Net Asset Value (C$) $343.6 $5.20Basic Shares Outstanding (MM) 63.3Dilutive Shares Outstanding (MM) 66.1

Source: Cormark Securities Figure 18 Net Asset Value Sensitivity Analysis (C$)

5.19889 11.75 12.75 13.75 14.75 15.75 Spot: 17.830.0% 13.02 15.79 18.54 21.30 24.06 29.79 2.5% 9.13 11.30 13.47 15.63 17.80 22.31 5.0% 6.35 8.09 9.82 11.55 13.29 16.89 7.5% 4.34 5.75 7.16 8.57 9.98 12.91

10.0% 2.87 4.04 5.20 6.36 7.52 9.94 15.0% 0.98 1.80 2.62 3.44 4.26 5.96

Long-term Silver Price

Dis

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16

Recommendation We are initiating coverage on Bear Creek Mining with a Buy rating and 12-month target price of C$5.20 per share based on a 1.0x multiple to our NAV. Its Corani and Santa Ana properties are two high-quality silver assets in mine-friendly Peru that present the potential to launch Bear Creek Mining from an explorer to a mid-tier producer by 2013. In the short term, we expect the stock to move sideways until the company raises additional capital (likely within the next few months) but as the company completes its feasibility studies in 2010, the reduced risk and increased takeover potential should bring increased investor interest, thereby moving the stock higher.


17

Coeur D’Alene Mines Corp. (CDM- C$24.67, TSX; CDE- $23.19, NYSE)

Recommendation: Market Perform Target Price: C$28.00

Figure 19 Statistics & Estimates Current Price C$24.67 Shares Outstanding (MM)52 Wk High C$24.89 Basic52 Wk Low C$5.00 DilutedCash (MM) $24.7 Mngt. & Dir.Total Debt (MM) $230.7 Market Cap.NAVPS C$16.21 FloatPrice/NAV 1.5x EVDividend $0.00 ReservesDividend Yield 0.0% P&P+M&I+Inf

2008A 2009E 2010ESilver Eq. Prod. Q1 3.3 A 4.2 A 6.7(Mmoz) Q2 3.2 A 5.3 A 7.0

Q3 3.7 A 7.3 7.3Q4 4.6 A 7.4 8.5FY 14.7 A 24.2 29.5

Diluted EPS, adj. FY $(0.07) A $0.28 $0.21Diluted CFPS, adj. Q1 $0.25 A $0.14 A $0.49

Q2 $0.07 A $0.25 A $0.54Q3 $0.00 A $0.42 $0.55Q4 $(0.34) A $0.71 $0.73FY $(0.02) A $1.52 $2.31

Prod. y/y chg NA 65% 22%CFPS y/y chg NA NA 53%EV/Prod. $128 $78 $64EV/Resource $1.99 NA NAP/CF NA 14.7x 9.6x

79.2

404.2 MMoz945.4 MMoz

C$1,375.1$1,880.2

Fiscal YE Dec. 31

19.7C$1,860.2

75.4

Sources: Cormark Securities, Company Reports I


Source: BigCharts (Oct. 13 /09)

The Start of Something Big

Coeur D’Alene Mines is an unhedged precious metals mining company based out of Idaho with assets in the US, Chile, Argentina, Bolivia, Mexico and Australia.

Coeur d’Alene is highly levered to precious metals as its revenue is derived purely from silver and (increasingly) gold with no contributions from base metals such as lead or zinc.

A strong production growth profile is being driven primarily by the San Bartolome, Palmarejo and Kensington mines. These assets will form the bulk of the company’s production going forward, at cash costs significantly lower than current levels.

The company has been actively engaged in a debt reduction program that included the repurchase of a significant portion of its convertible debt in 2009. While approximately $260 MM remains, the balance sheet appears manageable.

Capital costs to develop its growth projects have largely been sunk, which should see significant increases in cash flow over the coming quarters.

After several years of significant capital expenditure, Coeur is now staged to reap the benefits of significant growth in production and cash flow from three new large mines.

On a valuation basis, the company is close to fully valued but as it makes further progress on its three new mines, it may increase its premium valuation based on its undiluted precious metal exposure, a strong growth profile, large size and diversified production in low-risk jurisdictions.

We are initiating on Coeur d’Alene with a Market Perform recommendation and a 12-month target of C$28.00 per share. Our target price is derived using a 1.5x NAV, and 12x multiple to our 2010 cash flow estimate.

Bear Creek is currently developing and exploring two assets in southern Peru. Unique in that the junior mining company owns a world class asset, we see Corani and Santa Ana still open to further exploration.


18

Company Profile Coeur was incorporated in 1928 and is listed on the NYSE (CDE) and the TSX (CDM).

Currently, the company is developing the world’s largest pure silver mine in Bolivia (SanBartolome) as well as multiple large precious metal deposits focusing on silver. Thecompany has developed a diversified portfolio of assets and is currently operating sixmines all in relatively mining-friendly jurisdictions, including Alaska, Chile, Australia,Nevada and Mexico (see Figure 21). Fiscal year 2009 is a transitional year for thecompany as the bulk of production begins to flow from three new, larger and low-costassets; San Bartolome, Palmerejo and the Kensington Gold Mine.

Figure 21 Coeur d’Alene’s Assets In Peru

Source: Coeur d’Alene Mining

New Assets Driving New Growth

Coeur has an impressive asset base with total reserves of 248 MMoz silver and over 2.2 MMoz gold (see Figure 22). The bulk of this, and the company’s future, comes from transitioning its production to rely mainly on the three newest assets; San Bartolome in Boliva, Palmarejo in Mexico and the Kensington Gold Mine in Alaska. Investors should pay particular attention to Palmarejo and Kensington as these projects will go on to forming the bulk of production for the company (~70% of AgEq production post 2010).

At San Bartolome, Coeur is completing its first year of commercial production. The mineral rights are held through JV and long-term lease agreements with mining cooperatives and the Bolivian State Mining Company (COMIBOL), which has provided for a good working relationship with Coeur. The company has spent $237.9 MM to get the project into production and should produce 8.7 MMoz in 2009. The oxide mineralization at the project is hosted in loose talus deposits, which allow for essentially free digging surface mining and standard cyanide-leach techniques. Costs have come down since production began in June 2008 and we expect improvements in performance from the project in the future. Based on the low grades, we expect cash costs of


19

~$6.60/oz silver. This should provide over 16 years of stable production, making it a core asset for the company.

The Palmarejo project in Northern Mexico began production in March 2009 and continues to ramp up. This flagship asset is on track to become Coeur’s largest and lowest cost mine contributing to almost 50% of the company’s silver equivalent production. During Q2/09, the project produced 588,000 oz of silver and 9,740 oz of gold and we expect this to grow toward 2 MMoz and 27,500 oz, respectively, by the end of 2009. Reported cash costs in Q2/09 were quite high as pre-stripping, development and startup costs were expensed rather than capitalized, but we expect costs should drop quickly to the ~$2.00/oz (net of gold by-product) level going forward. The area also holds excellent upside potential. Coeur is spending about $8 MM per year on exploration in the Palmarejo district with the goal of expanding and upgrading both Palmerejo and the 43 MMoz Guadalupe deposit, which is located about 6 km from the mine.

The Kensington Mine, which received a “green light” in Q2, will change the complexion of Coeur adding significant gold-only production when it starts production in late 2010. When ramped up in 2011, Kensington should produce 117,000 oz of gold at a cash cost of $475/oz. On a silver equivalent basis it will contribute over 7.5 MMoz AgEq. The project is largely complete with only final construction of the tailings facility remaining. Construction of the tailings facility had been suspended in 2006 due to an injunction over environmental concerns, but in Q2/09, the United States Supreme Court reversed the suspension of the tailings permit allowing CDM to proceed with the construction.

Upside Potential In Smaller Assets

Historically, Coeur’s annual production also includes about 12 MMoz AgEq from fivesmaller assets; Martha, Rochester, Cerro Bayo, Broken Hill and Endeavor. Several of these are winding down or shut down but upside still exists.

At Martha, an underground silver and gold mine in the Santa Cruz Province of southern Argentina, $2.9 MM is being spent to test prospective targets and extend the mine life past 2010. Coeur added a flotation mill in 2007 and the mine has delivered over 2.5 MMoz of silver and 3,313 oz of gold annually since. Being an epithermal quartz vein deposit, it remains open and reserves should continue to be replaced.

At Rochester, one of Coeur’s oldest assets, mining operations were shut down in 2007 but low-cost residual heaps are continuing to contribute up to 300,000 oz AgEq annually and should continue through 2014. However, Coeur has scoped out the possibility of processing some remaining low-grade resource (52 MMT grading 0.564 oz/T silver) ore that could add six more years of life averaging 200,000 oz of silver and 16,000 oz of gold. Its internal study showed a positive NPV but a “go” decision has yet to be made.

Cerro Bayo remains on care and maintenance while ongoing exploration of the Au-Ag epithermal vein district works toward expanding the resource to cover a three-year $8.00/oz hurdle.


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Figure 22a Coeur d’Alene’s Reserve And Resource Profile

Short Tons Silver Gold Silver Gold AgEqLocation (000s) (oz/ton) (oz/ton) (000oz) (000oz) (000oz)

ProvenRochester Nevada, USA - - - - - -Cerro Bayo Chile - - - - - -Martha Argentina 18 55.86 0.07 992 1 1,075San Bartolome Bolivia 160 6.35 - 1,015 - 1,015Kensington Alaska, USA 199 - 0.38 - 76 5,225Endeavor Australia 3,417 1.47 - 5,019 - 5,019Broken Hill Australia 6,431 1.58 - 10,185 - 10,185Palmarejo Mexico 6,840 5.09 0.06 34,844 406 62,757Subtotal 17,065 52,055 483 85,275

ProbableRochester Nevada, USA - - - - - -Cerro Bayo Chile 547 10.18 0.07 5,564 38 8,177Martha Argentina 58 31.22 0.04 1,817 2 1,961San Bartolome Bolivia 35,147 3.81 - 134,015 - 134,015Kensington Alaska, USA 5,301 - 0.26 - 1,402 96,388Endeavor Australia 5,842 3.55 - 20,753 - 20,753Broken Hill Australia 4,616 1.05 - 4,861 - 4,861Palmarejo Mexico 5,355 5.37 0.07 28,732 350 52,795Subtotal 56,866 195,742 1,792 318,949

Total Proven and Probable 73,931 247,797 2,275 404,224

Ounces (000s)Grade

Source: Coeur d’Alene Mining


21

Figure 22b Coeur d’Alene’s Reserve And Resource Profile

Short Tons Silver Gold Silver Gold AgEqLocation (000s) (oz/ton) (oz/ton) (000oz) (000oz) (000oz)

MeasuredRochester Nevada, USA 83,179 0.52 0.01 43,640 408 71,690Cerro Bayo Chile 316 9.50 0.15 3,005 49 6,374Martha Argentina 1 32.03 0.03 32 0 34San Bartolome Bolivia - - - - - -Kensington Alaska, USA 680 - 0.25 - 169 11,619Endeavor Australia 10,577 1.47 - 15,580 - 15,580Broken Hill Australia 3,209 5.16 - 16,560 - 16,560Palmarejo Mexico 5,386 3.44 0.04 18,515 237 34,809Subtotal 103,348 97,332 863 156,665

IndicatedRochester Nevada, USA 30,879 0.59 0.00 18,170 123 26,626Cerro Bayo Chile 592 9.83 0.13 5,816 74 10,904Martha Argentina 45 29.44 0.02 1,314 1 1,390San Bartolome Bolivia 37,087 1.75 - 64,845 - 64,845Kensington Alaska, USA 2,044 - 0.16 - 325 22,344Endeavor Australia 7,551 0.24 - 1,822 - 1,822Broken Hill Australia 3,167 3.86 - 12,222 - 12,222Palmarejo Mexico 9,987 3.49 0.04 34,808 439 64,989Subtotal 91,352 138,997 962 205,141

Total Measured and Indicated 194,700 236,329 1,825 361,807

InferredRochester Nevada, USA - - - - - -Cerro Bayo Chile 1,341 10.76 0.12 14,436 157 25,230Martha Argentina 33 46.96 0.05 1,528 2 1,666San Bartolome Bolivia 249 1.38 - 1,628 - 1,628Kensington Alaska, USA 742 - 0.37 - 273 18,769Endeavor Australia 772 2.83 - 2,183 - 2,183Broken Hill Australia 6,736 1.62 - 10,913 - 10,913Palmarejo Mexico 23,799 2.46 0.04 58,508 880 119,008Subtotal 33,672 89,196 1,312 179,396

Ounces (000s)Grade

Effective December 31, 2008 except Endeavor and Broken Hill effective June 30, 2008 Mineral Resources are in addition to Mineral Reserves and have not demonstrated economic viability Metal prices used for mineral reserves were $13.25 per ounce of silver and $750 per ounce of gold except Endeavor at $12.00 per ounce of silver, Broken Hill at $2.22 per ounce of silver. Source: Coeur d’Alene Mining

Stronger Balance Sheet With the bulk of capital expenditure spent and a strong silver price, Coeur has aggressively reduced debt, which has come down from $350 MM to ~$260 MM, the balance of which remains in two convertible notes and a $45 MM term loan for the Kensington Mine. With the sale of its Broken Hill mine in July, the company beefed up its cash position to about ~$53 MM. With cash flow estimates approaching $150 MM in 2010, we see Coeur as well positioned to deliver on its aggressive growth plan.


22

Figure 23 Coeur d’Alene’s Silver Equivalent Production Profile (2006–17)

0

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10,000

15,000

20,000

25,000

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35,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Silv

er E

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oz)

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5.00

5.50

6.00

6.50

7.00

7.50

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h C

osts

($/o

z A

gEq)

Rochester, Nevada, USA Cerro Bayo, Chile Martha, Argentina

Endeavor, NSW, Australia Broken Hill, Aus tralia San Bartolom e, Bolivia

Kens ington, Alaska,USA Palm arejo, Mexico Cash Costs


Valuation Given the significant growth expectations over the next three years, we use a sum-of-parts discounted cash flow analysis in valuing Coeur d’Alene. As a precious metals producer, we apply a 5% discount rate to the company’s producing assets. For the Kensington gold mine, which is financed and about 90% complete, we apply a higher discount rate of 8% to account for the timing of completion risk. Based on this methodology, we arrive at a NAV of C$1.28 BB or C$16.21 per share (see Figure 24). As an unhedged silver producer, Coeur also offers good leverage to the price of silver (see Figure 25).


23

Figure 24 Coeur d’Alene Mining’s Net Asset Value Discount

Mining Assets Ownership Rate $MM $/sharePalmarejo, Mexico 100% 5.0% $600.3 $7.58Kensington, Alaska,USA 100% 8.0% $299.1 $3.78San Bartolome, Bolivia 100% 5.0% $323.5 $4.08Endeavor, NSW, Australia 100% 5.0% $87.9 $1.11Rochester, Nevada, USA 100% 5.0% $27.6 $0.35Martha, Argentina 100% 5.0% $23.8 $0.30Cerro Bayo, Chile 100% 5.0% $- $-Total Mining Assets $1,362.2 $17.19Cash & Cash Equivalents $24.7 $0.31Total Debt $230.7 $2.91Total Financial Assets $(206.0) $(2.60)

Net Asset Value (US$) $1,156.2 $14.59Net Asset Value (C$) $1,284.7 $16.21

Dilutive shares outstanding (millions) 79.2 Source: Cormark Securities

Figure 25 NAVPS Sensitivity To Silver Price And Discount Rate

16.21314 11.75 12.75 13.75 14.75 15.75 Spot: 17.830.0% 17.67 19.39 21.10 22.82 24.54 28.11 2.5% 15.54 16.95 18.35 19.76 21.16 24.09 5.0% 13.88 15.05 16.21 17.38 18.55 20.98 7.5% 12.55 13.53 14.51 15.50 16.48 18.52

10.0% 11.46 12.30 13.13 13.97 14.81 16.55 15.0% 9.79 10.42 11.04 11.67 12.30 13.60

*Maintains Discount Rate of 10% for all Development stage projects

Long-term Silver Price

Dis

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Recommendation We are initiating coverage on Coeur d’Alene Mines with a Market Perform rating and 12-month target price of C$28.00 per share. Our target is derived using 1.5x multiple to NAV and 12x multiple to 2010E cash flow. Based on our valuation, Coeur is almost fully valued but additional upside potential exists in the near term from ongoing exploration and development work at Palmerejo, Rochester and Cerro Bayo that could add production to these established operations. In the longer term, the company remains wellpositioned to move into a top spot among large, low-cost silver producers, which could ultimately earn it even higher multiples. The unhedged pure gold and silver producer should prove attractive to precious metals investors.


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Fortuna Silver Mines Inc. (FVI - C$1.64, TSX)

Recommendation: Buy Target Price: C$2.30


2008A 2009E 2010EPayable Silver Q1 126 A 346 A 465(000's oz) Q2 168 A 422 A 470

Q3 219 A 393 475Q4 262 A 419 475FY 775 A 1,580 1,885

Cash Cost ($/oz) FY $0.99 A $2.96 $3.32Diluted CFPS, adj. Q1 $0.03 A $0.04 A $0.04

Q2 $0.04 A $0.06 A $0.04Q3 $0.02 A $0.03 $0.03Q4 $0.05 A $0.04 $0.03FY $0.14 A $0.18 $0.15

Prod. y/y chg NA 104% 19%CFPS y/y chg NA 26% -14%EV/Prod. 0.1x 0.1x 0.1xEV/Resource $1.45 NA NAP/CF 10.5x 8.3x 9.7x

94.999.3

4.0C$155.6

Fiscal YE Dec. 31

C$149.0$106.9

20 MMoz74 MMoz

Sources: Cormark Securities, Company Reports Figure 27 Price Chart


Growing Silver Producer

Fortuna Silver is a growing silver miner, developer and explorer with an operating mine in Peru and a development project in Mexico.

Its 100%-owned Caylloma silver-zinc-lead mine located in the mineral-rich Southern Peruvian Andes produces about 1.6 MMoz silver per year. The mine is situated within a highly prospective land package with 30 known silver veins currently being explored.

Fortuna is expected to start construction on its 100%-owned San Jose mine in Mexico early next year, which should provide the company with significant growth boosting production to over 5 MMoz silver per year.

The company is well financed with a strong balance sheet with over $33 MM in cash and almost no debt. In addition to the positive free cash being generated at Caylloma, we expect Fortuna will be able to fund construction of $46 M San Jose mine internally.

Additional growth is expected to come from ongoing project enhancements, exploration and future acquisitions.

We are initiating coverage on Fortuna Silver with a Buy recommendation and a 12-month target price of C$2.30 per share.


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Company Profile Fortuna Silver is a growing silver and base metal producer with assets in Mexico and

Peru. The management team is a proven mine developer and operator with a successful track record of identifying and developing undervalued assets. Its primary producing asset is the Caylloma silver-lead-zinc mine in Peru, which is ramping up to 1.6 MMoz of silver per year. Its secondary asset is the San Jose silver-gold project in Mexico, which is on track for production in 2011 of over 3 MMoz per year.

Figure 28 Fortuna Silver Mine Location

Source: Fortuna Silver Mines Inc.

Growing Resource Base: In July 2009, Fortuna increased its global reserve base by 20 MMoz of silver for a total of65 MMoz of measured and indicated silver, with zinc, lead and gold by-products (seeFigure 29). The resource increase came from its Caylloma Mine in Spain where theresource comprises six major vein systems averaging 160 g/T silver. The northern threesystems contain silver mineralization with traces of base metals or gold while thesouthern three systems are polymetallic containing silver-lead-zinc-copper-goldmineralization. Historically, the majority of the ore has been sourced from the Animasvein in the South, resulting in significant lead and zinc revenues rather than silver.However, as more faces are opened on veins in the northern (silver-dominant) section, therevenue mix is shifting more heavily toward silver. The resource at the San Jose Projectin Mexico comprises four major vein systems and a stockwork zone with minor gold by-products with an exceptional resource grade of 260 g/T silver. Work-to-date has focusedon the Trinidad zone and the San Ignacio zone, located approximately 800 m apart on thesame vein system. Mineralization is present in high-grade shoots, with estimated truewidths ranging from less than 2 m to greater than 20 m, which should make for excellentmining. Locally, mineralized stockwork veining is present between the Trinidad andBonanza veins, including continuously mineralized widths estimated at over 80 m locally.We expect an updated resource on San Jose in the following months.


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Figure 29 Fortuna Silver Reserves And Resources Metric Zinc Lead Gold Silver

Tonnes Grade Grade Grade Grade Zinc Lead Gold Silver(000s) % % g/t g/t (000s lbs) (000s lbs) (000s) (000s)

CayllomaProven & Prob. Reserves 4,033 2.58% 1.70% 0.55 156.00 229,392 151,150 71 20,228Measure & Indicated Res. 268 2.17% 1.18% 0.31 64.00 12,797 6,959 3 550Inferred Resources 1,279 3.25% 1.92% 0.29 187.00 91,640 54,138 12 7,690Total 5,580 2.71% 1.73% 0.48 158.70 333,829 212,246 86 28,468

San JoseMeasure & Indicated Res. 1,471 -- -- 2.19 262.60 -- -- 104 12,419Inferred Resources 3,898 -- -- 2.57 260.60 -- -- 322 32,659Total 5,369 -- -- 2.47 261.16 -- -- 426 45,079

Total FortunaProven & Prob. Reserves 4,033 2.58% 1.70% 0.55 156.00 229,392 151,150 71 20,228Measure & Indicated Res. 1,739 0.33% 0.18% 1.90 232.04 12,797 6,959 106 12,970Inferred Resources 5,177 0.80% 0.47% 2.01 242.42 91,640 54,138 334 40,349Total 10,949 1.38% 0.88% 1.45 208.94 333,829 212,246 512 73,546

Contained

Sources: Cormark Securities, Fortuna Silver Mines Inc.

Caylloma – Steady State Production

The Caylloma Mine is located 225 km northwest of Arequipa, Peru, in mountainous highlands at an elevation of 4500 m above sea level. The mine, processing plant and related infrastructure are located 14 km northwest of the town of Caylloma. Fortuna purchased a 100% interest in the Caylloma Mine and related mining concessions in 2005. After significant upgrading and modernization of the ore processing plant, it restarted production in October 2006 at a rate of 600 tpd bringing the mine and processing plant to its current operating at a rate of 1,200 tpd. The bulk of production is currently sourced from the Animas vein (approx. 80%), which provides the company with significant zinc and lead by-product credits but, as mentioned above, as new veins are opened, the mix is becoming silver dominated.

Current reserves outline a mine life in excess of nine years but based on its long operating history and open nature of the veins, we expect further increases to the reserveas mining and definition drilling progresses. Exploration upside is good, with over 30 known mineralized veins having been identified within the district. In addition to extending the mine life, Fortuna is constantly seeking mine optimizations. One such project currently being contemplated is the installation of a copper circuit, which is anticipated to produce over 500,000 lb Cu per annum for a capital cost of less than $1 MM.

San Jose – Robust Growth The 100%-owned San Jose Project is a high-grade silver and gold bearing epithermal vein system located in the state of Oaxaca in southern Mexico. In January 2009, a 33,000 m in-fill drilling program was completed in the Trinidad Area of the San Jose Project. Results are presently being used to update the existing resource estimate and should bereleased during the fourth quarter.

Fortuna has completed metallurgical testing and is advancing with a feasibility-level engineering study, which is expected to be completed by the year-end. The company is currently envisioning a conventional flotation concentration process plant where 90% recoveries for silver and gold can be achieved. The company completed a positive scoping study on the treatment of grey water from a nearby industrial plant to source water required for processing at San Jose. Detailed engineering and permitting for a water source is advancing and a final agreement is expected to be signed imminently. An


27

Environmental Impact Study submitted in April 2009 is expected to be approved in the upcoming weeks. Power, which has been approved by the Mexican Federal Energy Commission, is expected to come from the national power grid providing the mine with the required 5 MW of power for the proposed scale of the operation.

Production will be similar to Caylloma, with a 1,500 tpd underground operation. Construction is expected to commence by early 2010 pending a formal go-ahead decision from the board of directors. Capital costs are approximately $46 MM, which should allow production to begin in 2011. Fortuna is in a position to finance this construction from its healthy balance sheet of $33.7 MM in cash and generates some $14 MM in cash flow from Caylloma. The addition of San Jose should more than double Fortuna’s production profile to over 5 MMoz silver per annum.

Growth/Outlook Fortuna has a strong growth profile driven by ongoing operational, development and exploration efforts. With the successful ramp-up of San Jose, the company will be producing in excess of 5 MMoz silver annually by 2012. Cash costs should stabilize in the $3.00/oz range as the production mix shifts in favour of gold by-products from base metals (see Figure 30). There is currently nothing in the pipeline beyond San Jose and therefore much of management’s focus is on acquiring new assets. Management is very particular, preferring to wait until it finds high-grade, robust projects rather than just ounces in the ground. That said we would expect Fortuna to add another asset to its portfolio in 2010.

Figure 30 Fortuna Production Profile

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Figure 31 Fortuna Revenue Breakdown By Metal

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Valuation Since San Jose is still in development stage, we value Fortuna on a net asset value basis applying a 10% discount on the San Jose project and 5% discount to the steady-state production at Caylloma arriving at a NAV of C$237.5 MM or C$2.39 per share (see Figure 32). Several catalysts expected in the fourth quarter that could impact our valuation include 1) San Jose Resource Update, 2) San Jose Feasibility study and 3) the successful startup of the copper circuit at Caylloma. We do not expect major changes to our San Jose model following the feasibility but it will serve to validate and derisk the project to some degree. In early 2010, we should see a financing plan and revised timeline for San Jose, which should de-risk the project further.

Figure 32 Fortuna Silver Net Asset Value

Mining Assets Ownership Discount $MM $/share

Caylloma 100% 5.0% $66.9 $0.67San Jose 100% 10.0% $103.3 $1.04Total Mining Assets $170.2 $1.71Cash & Cash Equivalents $33.7 $0.34Proceeds from ITM Instruments $4.7 $0.05Total Financial Assets $38.4 $0.39Net Asset Value (US$) $208.6 $2.10Net Asset Value (C$) C$231.8 C$2.33

Diluted Shares Outstanding (MM) 99.3

Source: Cormark Securities Figure 33 Fortuna Silver Net Asset Value Sensitivity (C$)

$2.33 11.75 12.75 13.75 14.75 15.75 Spot: 17.830.0% 2.80 3.14 3.48 3.81 4.14 4.82 2.5% 2.28 2.55 2.82 3.08 3.34 3.89 5.0% 1.90 2.12 2.33 2.55 2.76 3.20 7.5% 1.62 1.80 1.97 2.15 2.32 2.68

10.0% 1.40 1.55 1.70 1.84 1.98 2.28 12.5% 1.24 1.36 1.48 1.60 1.72 1.97 15.0% 1.11 1.21 1.32 1.42 1.52 1.73

Long-Term Silver Price

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Recommendation We are initiating coverage on Fortuna Silver Mines with a Buy recommendation and a target price of C$2.30 per share, which is based on a 1.0x multiple to NAV, in line with growing precious metals producers. Fortuna shares offer investors exposure to a high-quality, junior producer with good leverage to the silver price and a rapidly growing production profile.


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Silver Wheaton Corp. (SLW - C$14.74, TSX, NYSE)

Recommendation: Buy Target Price: C$19.00


2008A 2009E 2010ESilver Sales Q1 2,819 A 3,158 A 6,208(000's oz) Q2 2,864 A 2,938 A 6,427

Q3 2,716 A 5,144 6,843Q4 2,738 A 5,944 7,238FY 11,137 A 17,183 26,716

Cash Cost ($/oz) FY $3.95 A $3.95 $4.00Diluted CFPS, adj. Q1 $0.14 A $0.08 A $0.19

Q2 $0.14 A $0.09 A $0.20Q3 $0.10 A $0.14 $0.21Q4 $0.06 A $0.21 $0.23FY $0.44 A $0.52 $0.83

Prod. y/y chg NA 54% 55%CFPS y/y chg NA 17% 62%EV/Prod. 0.4x 0.2x 0.2xEV/Resource $2.60 NA NAP/CF 30.0x 25.7x 15.9x

337.3354.2

0.6C$4,972.2

Fiscal YE Dec. 31

C$4,963.4$4,284.7

861 MMoz1,649 MMoz

Sources: Cormark Securities, Company Reports



Marquis Name in the Silver Space

Silver Wheaton is the largest metal streaming company in the world. The Company purchases silver production from by-product producers and offers shareholders’ exposure to 100% silver cash flow at contracted operating prices.

Silver streams are paid for upfront, purchased at a predictable cost, providing upside potential to the Company in a rising silver price environment while minimizing the downside risk.

The Company has 16 silver stream agreements for production from long-life assets where resource expansion potential exists. As a result, Silver Wheaton has positioned itself as the largest pure-play silver company in the world.

Silver sales are expected to grow approximately 250% from 2008 to 2013 from a well-diversified group of assets.

We believe Silver Wheaton is one of the few pure-play equities offering investors significant exposure to the silver market with low geo-political risk and a strong growth profile.

With a strong balance sheet and excellent track record, we expect that the company will continue to grow aggressively through accretive acquisitions.

We are initiating coverage on Silver Wheaton, with a Buy recommendation and 12-month target of C$19.00 per share. Our target price is derived using a 1.8x multiple to NAV and 18x multiple to our 2010 cash flow estimate.


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Company Profile/Investment Summary

Established in 2004, Silver Wheaton has quickly become the largest among royalty and metal streaming companies in the world with a market cap of over $4 BB. The company’s strategy is to enter into agreements where, in exchange for an upfront payment, it has the right to purchase silver production, at a low fixed cost, from high-quality mines located in politically stable regions. This metal-streaming model offers several benefits to investors over traditional mining companies including;

1) Pure leverage to increasing silver prices

2) Fixed operating costs (in Silver Wheaton’s case, about $3.90/oz)

3) Full exposure to exploration and production upside without associated costs

4) No environmental or closure responsibilities

The structure has very low overhead and is structured to be tax effective, serving to further amplify the benefits to this type of business entity. In short, the business structure gives investors exposure to all of the best parts of a mining company, without exposure to soaring mining costs and ongoing capital requirements. The downside of course is if a company fails, the silver stream is lost but Silver Wheaton is very selective in its contracts focusing on the most important projects in the most stable companies.

Sales of silver streams are also attractive to polymetallic producers as they provide a source of non-dilutionary financing without selling off core assets. In focusing specifically on by-product silver streams, Silver Wheaton has found an attractive niche. Many base metal mines produce silver by-products but those companies typically do not receive the premium valuation multiples enjoyed by their precious metals peers and therefore can be more easily convinced to enter into a contract. As such, Silver Wheaton has a very large pool from which to target the best projects. Investors have taken to this model and its superior leverage to the silver price as evidenced by the recent price performance of the stock (see Figure 36).

Figure 36 Silver Wheaton’s Outperformance Of Silver Equities And Silver Bullion

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Key Assets To date, Silver Wheaton has entered into 16 agreements, including 4 recently acquired from Barrick Gold (see Figure 37). It is clear from the list that Silver Wheaton is focused on quality companies in low-risk jurisdictions. Currently, the company relies on Luismin for 33% of its attributable production but the mix will become much more diversified as


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Penasquito and, eventually, Pascua-Lama ramp up (see Figure 38).

Figure 37 Silver Wheaton’s Silver Streams

Owner/OperatorLocation of Mine

Attributable Silver % From Mine

Attributable Gold % From Mine

Remaining Term of

Agreement

1) Luismin Goldcorp Inc. Mexico 100% -- 21 Years2) Zinkgruvan Lundin Mining Sweden 100% -- Life of Mine3) Yauliyacu Glencore Peru 100% -- 17 Years4) Penasquito Goldcorp Inc. Mexico 25% -- Life of Mine5) Stratoni European Goldfields Greece 100% -- Life of Mine6) Mineral Park Mercator Minerals USA 100% -- Life of Mine7) Camp Morado Farallon Resources Mexico 75% -- Life of Mine8) La Negra Aurcan Corporation Mexico 50% -- Life of Mine9) Keno Hill Alexco Resources Corp. Canada 25% -- Life of Mine10) Cozamin Capstone Mining Mexico 100% -- 8 Years11) Neves Corvo Lundin Mining Portugal 100% -- 48 Years12) Minto Capstone Mining Canada 100% 100% Life of Mine13) Pascua-Lama Barrick Gold Chile/Argentina 25% -- Life of Mine14) Lagunas Norte Barrick Gold Peru 100% -- 4 Years15) Pierina Barrick Gold Peru 100% -- 4 Years16) Veladero Barrick Gold Argentina 100% -- 4 Years

Operation

Source: Silver Wheaton

Other Assets In addition to the aforementioned silver streams, the company also has other assets with the potential to add to its long-term growth potential. An agreement with MTO Holdings for a silver stream from its Aljustrel zinc-lead-silver mine in Portugal could add over 1 MMoz to the production profile if it ever comes off care and maintenance. Silver Wheaton holds a right of first refusal to purchase any silver or gold streams from Capstone’s Kutcho copper-zinc-silver-gold project, which could add over 500,000 oz of production if it can be developed. The company holds a convertible debenture with Aquiline Resources that could allow it to purchase 12.5% of the life-of-mine silver

production from the Loma de la Plata zone at the Navidad project. We currently attribute no value to these assets.

Growth/Outlook The current year has been one of dramatic growth for Silver Wheaton, with two major acquisitions and related financings. In the first half of the year, it acquired Silverstone Resources adding 4.5 MMoz AgEq of production. In the second half, it struck the deal with Barrick for 25% life-of-mine silver production from Pascua-Lama and, to bridge the gap to its commissioning, current production from the Lagunas Norte, Pierina and Veladero mines until the end of 2013. As a result, Silver Wheaton has positioned itself for tremendous growth over the next four years. We estimate silver production to grow over 250% from 11 MMoz in 2008 to over 40 MMoz in 2013

During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities for Aquiline Resources Inc.


33

Figure 38 Silver Wheaton Production Profile

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Sources: Cormark Securities, Silver Wheaton In the near term, the market will be focused on the timely ramp up of Penasquito, which

should contribute over 4 MMoz Ag to the silver stream in 2010. Although Goldcorp is not expected to declare commercial production from this mine in 2009, Silver Wheaton is expected to receive over 1 MMoz from the heap-leach operation and during mill commissioning. We expect silver contributions from Penasquito to continue growing substantially with the staggered ramp-up of SAG mills. Attributable production to SLW is expected to grow steadily to over 7 MMoz by 2013. Beyond growing contribution from existing contracts, we expect Silver Wheaton will continue its aggressive growthstrategy of acquiring precious metal streams from strong assets with low geopolitical risk.

Valuation We have modeled the company’s silver streaming agreements using our silver price assumptions and arrived at a net asset value of C$4.2 BB or C$11.74 per share (see Figure 39). On a cash flow basis, the company should generate ~$295 MM in 2010 growing to over $411 MM in 2013 based on our silver price forecast. Silver Wheaton’sstock currently trades at ~15x our 2010 cash flow estimate, which is in line with other precious metal companies. However, given the lower-risk nature SLW’s silver streaming model, the high quality of the contracted projects, and the significant growth profile, we submit that Silver Wheaton warrants a premium valuation. Applying a 1.8x multiple to NAV and an 18x cash flow multiple, we arrive at a target price estimate of $19.00 per share.


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Figure 39 Silver Wheaton Net Asset Value Mining Assets Ownership Discount $MM $/share

Luismin 100.0% 5.0% $767.9 $2.17Zinkgruvan 100.0% 5.0% $230.9 $0.65Yauliyacu 100.0% 5.0% $593.7 $1.68Penasquito 25.0% 5.0% $920.3 $2.60Stratoni 100.0% 5.0% $74.8 $0.21Mineral Park 100.0% 5.0% $80.8 $0.23Camp Morado 75.0% 5.0% $67.2 $0.19La Negra 50.0% 5.0% $13.3 $0.04Keno Hill 25.0% 5.0% $7.9 $0.02Cozamin 100.0% 5.0% $101.0 $0.29Neves Corvo 100.0% 5.0% $120.5 $0.34Minto 100.0% 5.0% $85.9 $0.24Pascua-Lama 25.0% 5.0% $249.5 $0.70Lagunas Norte 100.0% 5.0% $18.0 $0.05Pierina 100.0% 5.0% $23.8 $0.07Veladero 100.0% 5.0% $33.3 $0.09Total Mining Assets $3,388.7 $9.57

Financial AssetsCash & Cash Equivalents $340.3 $0.96Long-Term Debt $(121.5) $(0.34)Proceeds from ITM Instruments $135.1 $0.38Total Financial Assets $353.9 $1.00

Net Asset Value (US$) $3,742.7 $10.57Net Asset Value (C$) C$4,158.5 C$11.74

Dilutive shares outstanding (MM) 354.2

Source: Cormark Securities Figure 40 Silver Wheaton Net Asset Value Sensitivity

$11.74 11.75 12.75 13.75 14.75 15.75 Spot: 17.830.0% $15.08 $16.82 $18.55 $20.28 $22.01 $25.612.5% $11.88 $13.21 $14.53 $15.86 $17.18 $19.935.0% $9.66 $10.70 $11.74 $12.78 $13.82 $15.987.5% $8.06 $8.89 $9.73 $10.56 $11.40 $13.13

10.0% $6.87 $7.55 $8.24 $8.92 $9.61 $11.03

Long-Term Silver Price

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Recommendation We are initiating coverage with a Buy recommendation and a 12-month target price of C$19.00 per share. Our target is derived using 1.8x multiple to NAV and 18x multiple to 2010E cash flow. Silver Wheaton has effectively executed on its silver streaming strategy with growing series of agreements from high-quality assets. It has set the stage for impressive growth over the next four years that should see production more than double to over 40 MMoz of silver annually. Investors in Silver Wheaton gain exposure to significant growth with excellent leverage to the price of silver.


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Risks To Target The following is a list of the most common risks that apply to the stocks mentioned in this report. Generally, these risks will apply to all companies in varying degrees.

Commodity Price Risk: Our short- and long-term commodity price assumptions are based on detailed research, and viewed to be reasonable based on current information. However, the timing and magnitude of commodity price fluctuations are always a significant risk that, in most cases, strongly affects the value of mining and mineral exploration/development companies focused on a specific commodity. The primary metal exposure of the companies in this report is to silver; however, some may have exposure to other metal products, such as gold, zinc, lead and other metals, and the prices of these metals may affect their valuation.

Cost Risk: Both capital and operating costs may be affected by changes in input prices (fuel, steel, chemicals, etc.) and also be affected by relative currency changes. Companies may be at risk of unexpected cost escalation as a result of these potential threats.

Financing Risk: Companies with large growth plans or exploration companies with no free cash flow may require external capital to continue with exploration programs and develop new mines. In order to finance these endeavours, equity or project dilution may be taken to fund the equity portion of the capital costs if the project is to be developed. Shareholders may also be subordinated by lenders to finance an exploration project.

Geopolitical Risk: This risk deals with policies such as permitting and tax laws that are managed by governments of a jurisdiction (country, state, province, etc.). These policies usually affect mining companies more than exploration companies. Generally, developing countries are seen as being more risky because of the potential of a quick change in power to drastically change policies. Developed countries have their own geopolitical risk issues, and jurisdictions with powerful environmental lobbies can also make mining or exploration difficult.

Technical Risk: Ore reserve and resource risk is a technical risk that is derived from the subjective nature of geological interpretation. Engineering-based forecasts are by nature imprecise, and unexpected risks include events such as earthquakes and strikes. Such events could materially affect the value of shares.

Regulatory Risk: The mining industry is highly regulated, and as such, changes in the scope of environmental practices can have a significant impact on the cost and viability of mining operations.

Exploration Risk: In some cases, the market may build in expectations for exploration success before the actual exploration work has taken place. In the event that results do not meet with the market’s expectation, the company’s shares may be negatively affected.


36

Notes Page


37

Disclosure For a complete disclosure of potential conflicts of interest please refer to our website at cormark.com or call 1-800-461-2275 and ask to speak to the research coordinator.

Recommendation Terminology

Cormark’s recommendation terminology is as follows:

Top Pick our best investment ideas, the greatest potential value appreciationBuy expected to outperform its peer groupMarket Perform expected to perform with its peer groupReduce expected to underperform its peer group

Our ratings may be followed by "(S)" which denotes that the investment is speculativeand has a higher degree of risk associated with it.

Additionally, our target prices are based on a 12-month investment horizon.

Analyst Certification We, Matthew O’Keefe, Rajiv Chail and Rajbir Gill, hereby certify that the views expressed in this research report accurately reflect our personal views about the subjectcompany(ies) and its (their) securities. We also certify that we have not been, and will notbe receiving direct or indirect compensation in exchange for expressing the specificrecommendation(s) in this report.

TORONTO Roya l Bank P laza Sou th Tower

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www.cormark.com

For Canadian Residents: This report has been approved by Cormark Securities Inc. (“CSI”), member IIROC and CIPF, which takes responsibility for this report and its dissemination in Canada. Canadian clients wishing to effect transactions in any security discussed should do so through a qualified salesperson of CSI. For US Residents: Cormark Securities (USA) Limited (“CUSA”), member FINRA and SIPC, accepts responsibility for this report and its dissemination in the United States. This report is intended for distribution in the United States only to certain institutional investors. US clients wishing to effect transactions in any security discussed should do so through a qualified salesperson of CUSA. Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, some of the securities discussed in this report may not be available to every interested investor. Accordingly, this report is provided for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. The information and any statistical data contained herein have been obtained from sources believed to be reliable as of the date of publication, but the accuracy or completeness of the information is not guaranteed, nor in providing it does CSI or CUSA assume any responsibility or liability. All opinions expressed and data provided herein are subject to change without notice. The inventories of CSI or CUSA, its affiliated companies and the holdings of their respective directors, officers and companies with which they are associated may have a long or short position or deal as principal in the securities discussed herein. A CSI or CUSA company may have acted as underwriter or initial purchaser or placement agent for a private placement of any of the securities of any company mentioned in this report, may from time to time solicit from or perform financial advisory, or other services for such company. The securities mentioned in this report may not be suitable for all types of investors; their prices, value and/or the income they produce may fluctuate and/or be adversely affected by exchange rates. No part of any report may be reproduced in any manner without prior written permission of CSI or CUSA

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