Calgary Mining Conference
April 27th, 2011
Exploration, Silver & PGM’s
Chris Thompson, M.Sc.
Ben Asuncion
Haywood Securities, Canada
1
Disclaimers
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information presented, while obtained from sources we believe reliable, is checked but not guaranteed against errors or omissions.
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2
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regulated in the UK by the Financial Services Authority as a stock broker and investment adviser and is a member of the London
Stock Exchange. This report has been approved by HSUK for the purposes of section 21 of the UK’s Financial Services and Markets
Act 2000.If you wish to contact HSUK please email Michael Sweeney at msweeney@haywood.com. If you are a UK resident retail
customer and you propose to do business with Haywood Securities Inc., please take note of the following:
Haywood Securities Inc. or its subsidiaries or respective officers, directors or employees have or may have a material interest in the
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rights designed to protect investors under the Financial Services and Markets Act 2000 and under the rules of the Financial Services
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default; (b) in the event of a dispute, access to the UK’s Financial Ombudsman Service; (c) protection of money held on your behalf
under the FSA’s Client Money Rules.
Analyst Certification
I, Chris Thompson, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as
well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the
issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
3
Synopsis
Junior Exploration
Silver
•Fundamentals
•Equities
•Bear Creek Mining (BCM-V) & Mirasol Resources (MRZ-V)
Platinum Group Metals
•Fundamentals
•Equities
•North American Palladium (PDL-T)
4
Haywood’s Metals & Mining Analysts
Stefan Ioannou (sioannou@haywood.com)
Geordie Mark (gmark@haywood.com)
Joe Mazumdar (jmazumdar@haywood.com)
Kerry Smith (ksmith@haywood.com)
Chris Thompson (cthompson@haywood.com)
Junior Exploration Reports
What do we look for:
 Management: Market Credibility &Technical Expertise
 A Plan that Makes Sense: Corporate & Technical
 The Financial Ability to Execute
 Clear Timelines and Achievable Goals
Q2/11 Exploration Companies
Company
Market Cap
Country
Commodity/s
Analyst
Auryx Gold Corp. (TSX:AYX)
$115M
Namibia
Au
Chris Thompson
Balmoral Resources Ltd (TSXV:BAR)
$107M
Quebec
Au
Kerry Smith
Coventry Resources Limited (ASX:CVY)
$44M
Ontario
Au
Joe Mazumdar
Donner Metals Ltd. (TSXV:DON)
$41M
Quebec
Zn/Cu/Ag/Au
Stefan Ioannou
Edgewater Exploration Ltd. (TSXV:EDW)
$37M
Ghana, Spain
Au/Cu
Joe Mazumdar
Esperanza Resources Corp (TSXV:EPZ)
$102M
Mexico, Peru
Au/Ag
Joe Mazumdar
Hard Creek Nickel Corp. (TSX:HNC)
$31M
British Columbia
Ni/Co
Stefan Ioannou
Helio Resource Corp. (TSXV:HRC)
$37M
Tanzania & Namibia
Gold
Chris Thompson
Indicator Minerals Inc. (TSXV:IME)
$23M
Arizona, Nunavut
Cu/Diamonds
Chris Thompson
International Northair Mines Ltd. (TSXV:INM)
$39M
Mexico
Ag
Chris Thompson
Kaminak Gold Corp. (TSXV:KAM)
$244M
Yukon
Au
Chris Thompson
Kivalliq Energy Corp. (TSXV:KIV)
$43M
Nunavut
U3O8
Geordie Mark
MacArthur Minerals Ltd. (TSXV:MMS)
$123M
Western Australia
Fe/Ni/Au
Geordie Mark
Mawson Resources Ltd. (TSX:MAW)
$117M
Finland
U3O8
Geordie Mark
Northern Tiger Resources Inc. (TSXV:NTR)
$41M
Yukon
Au
Joe Mazumdar
Pachamama Resources Ltd (TSXV:PMA)
$48M
Argentina
Au
Joe Mazumdar
Papuan Precious Metals Corp. (TSXV:PAU)
$27M
Papua New Guinea
Au/Cu
Joe Mazumdar
Peregrine Metals Ltd. (TSX:PGM)
$158M
Argentina
Au/Cu
Joe Mazumdar
PMI Gold Corporation (TSXV:PMV)
$123M
Ghana
Au
Chris Thompson
Renaissance Gold Inc. (TSXV:REN)
$59M
Nevada
Au
Joe Mazumdar
Revolution Resources Corp. (TSX:RV)
$39M
North Carolina
Au
Joe Mazumdar
$179M
Mali
U3O8/Ag
Geordie Mark
$22M
Peru
U3O8/Ag/Pb/Zn
Geordie Mark
Indonesia
Cu/Au
Joe Mazumdar
Rockgate Capital Corp. (TSX:RGT)
Southern Andes Energy Inc. (TSXV:SUR)
Southern Arc Minerals Inc. (TSXV:SA)
Strongbow Exploration Inc. (TSXV:SBW)
Sunridge Gold Corp. (TSXV:SGC)
$139M
$38M
$129M
Trevali Mining Corporation (TSX:TV)
$0M
Zazu Metals Corporation (TSX:ZAZ)
$49M
S.Carolina, NWT, BC Au/Ni
Chris Thompson
Eritrea, Madagascar
Cu/Au
Stefan Ioannou
Peru
Ag/Pb/Zn
Stefan Ioannou
Alaska
Zn/Pb/Ag
Stefan Ioannou
Chris Thompson, M.Sc. (Eng),
P.Geo
cthompson@haywood.com
(604) 697-7433
Silver Fundamentals –
Supply & Demand
Silver Supply
Silver Fabrication Demand
Silver Mine Supply
3%
1%
9%
14%
11%
22%
18%
35%
7%
33%
6%
65%
30%
26%
20%
Mine Production
Secondary Supply
Mexico
Peru
United States
Canada
Photography
Jewellery
Electronics
Silver Fundamentals Trends
Silver Price: April
21: US$46.63 or
32:1 Au : Ag
'07
'07
'07
'07
'08
'08
'08
'08
'08
'09
'09
'09
'09
'10
'10
'10
'10
'10
'11
Mar '11
Feb '11
Jan '11
-
Dec '10
Nov '10
100
Oct '10
100
Sep '10
200
Aug '10
200
Jul '10
300
Jun '10
300
May '10
400
Apr '10
500
Mar '10
600
Feb '10
600
Jan '10
700
Millions of troy ounces
700
Dec '09
Apr
Jul
Sep
Dec
Feb
May
Jul
Oct
Dec
Mar
May
Aug
Oct
Jan
Mar
Jun
Aug
Nov
Jan
Millions of troy ounces
Silver Fundamentals –
ETF Holdings
April 2011: 987 M oz or
61% of annual supply
500
400
Silver Producers – CFPS
Multiples
Company
Ticker
S Price
MC
EV
CFPS (US$)
P/CFPS
2011/12
(US$)
(US$M)
(US$M)
2010
2011
2012
2010
2011
2012
Average
Compania de Minas Buenaventura SA
Coeur d`Alene Mines Corporation
NYSE:BVN
NYSE:CDE
$39.67
$31.61
$10,094
$2,830
$9,748
$2,957
$1.64
$1.53
$5.39
$4.38
$6.20
$5.36
24x
21x
7x
7x
6x
6x
7x
6x
Endeavour Silver Corp.
First Majestic Silver Corp.
TSX:EDR
TSX:FR
$11.79
$23.75
$958
$2,374
$866
$2,334
$0.49
$0.71
$0.90
$1.33
$1.15
$1.75
24x
34x
13x
18x
10x
14x
11x
15x
Fortuna Silver Mines Inc.
Fresnillo PLC
TSX:FVI
LSE:FRES
$6.28
$26.44
$770
$18,960
$677
$18,588
$0.20
$1.03
$0.37
$1.66
$0.67
$1.95
31x
26x
17x
16x
9x
14x
12x
15x
Gammon Gold, Inc.
Hecla Mining Co.
TSX:GAM
NYSE:HL
$10.82
$9.22
$1,858
$2,574
$1,772
$2,296
$0.73
$0.67
$1.30
$0.81
$1.58
$0.94
15x
14x
8x
11x
7x
10x
8x
11x
Hochschild Mining PLC
Pan American Silver Corp.
Joint Stock Company Polymetal
LSE:HOC
TSX:PAA
RTS:PMTL
$10.06
$37.68
$18.65
$3,402
$4,062
$6,675
$3,316
$3,721
$7,166
$0.85
$1.93
$0.55
$1.34
$3.37
$1.32
$1.33
$3.65
$1.83
12x
20x
34x
7x
11x
14x
8x
10x
10x
8x
11x
12x
Revett Minerals Inc
Scorpio Mining Corp.
TSX:RVM
TSX:SPM
$6.17
$1.52
$205
$287
$197
$295
N/A
$0.05
$1.05
$0.11
$0.89
$0.42
NMF
30x
6x
13x
7x
4x
6x
6x
Silver Standard Resources Inc.
Silver Wheaton Corp.
TSX:SSO
TSX:SLW
$34.80
$41.76
$2,779
$14,732
$2,626
$14,396
-$0.02
$0.95
$1.32
$2.07
$1.99
$2.21
NMF
44x
26x
20x
18x
19x
21x
20x
Silvercorp Metals Inc.
Western Mining Co. Ltd.
TSX:SVM
$14.45
SHSE:601168 $2.78
$2,525
$6,634
$2,322
$7,130
$0.37
N/A
$0.56
N/A
$0.78
N/A
Average
39x
NMF
26x
26x
NMF
14x
19x
NMF
11x
22x
NMF
12x
* Priced as of Wednesday, April 20, 2011
Source: Bloomberg CFPS Consensus Estimates, Capital IQ
A Broad Range : P / CF: 6x to 22x
Silver Equity
Performance
Returns
Group Avg
TSX
TSXV
Silver
120%
1.80
SBR
FR
100%
1.50
EDR
80%
1.20
MND
SOL
RVM
SPM
FVI
0.90
UXG
USA
OK
0.60
SVM
ASM
AUN
SLW
HOC
FRES
20%
THO
SAC
SSO
GAM
CDE
40%
BCM
AUMHL
CSC
MSVMRZ
0.30
PAA
MMZ
SVL
0%
SLX
-20%
AGQ
-0.30
90 Day Performance: -30 % to 110%
ECU
APE
Apr-18
Apr-10
Apr-02
Mar-25
Mar-17
Mar-09
Mar-01
Feb-21
Feb-13
Feb-05
-0.60
Jan-28
-40%
Jan-20
Period Return
60% AXR
Indexed Performance
SBB
Silver Equity Leverage
50
First Majestic Silver Corp. vs. Silver Spot
30.00
45
45
12.00
25.00
40
10.00
40
35
35
25
6.00
20
15
Correlation Coefficient (rho) = 0.97
Silver Period Return = 81%
Endeavour Silver Corp. Return = 138%
Endeavour Silver Corp. (TSX:EDR)
Silver Spot
0.00
20-Nov-10
20-Dec-10
20-Jan-11
20-Feb-11
5.00
5
10
Silver Period Return = 81%
First Majestic Silver Corp. Return = 222%
First Majestic Silver Corp. (TSX:FR)
Silver Spot
0.00
20-Mar-11
Fortuna Silver Mines Inc. vs. Silver Spot
7.00
15
Correlation Coefficient (rho) = 0.97
0
20-Oct-10
25
10.00
10
2.00
30
15.00
0
20-Oct-10
50
20-Nov-10
20-Dec-10
20-Jan-11
20-Feb-11
20-Mar-11
Coeur d`Alene Mines Corporation vs. Silver Spot
40.00
45
40
30
4.00
25
3.00
20
35
Share Price
35
Silver (US$/oz)
Share Price
40
30.00
5.00
2.00
25.00
30
20.00
25
20
15.00
15
15
10.00
Correlation Coefficient (rho) = 0.95
Correlation Coefficient (rho) = 0.94
10
1.00
50
45
35.00
6.00
5
Silver Period Return = 81%
Fortuna Silver Mines Inc. Return = 78%
Fortuna Silver Mines Inc. (TSX:FVI)
Silver Spot
0.00
20-Oct-10
5
0
20-Nov-10
20-Dec-10
20-Jan-11
20-Feb-11
20-Mar-11
10
5.00
Silver Period Return = 81%
Coeur d`Alene Mines Corporation (NYSE:CDE)
Coeur d`Alene Mines Corporation Return = 53% Silver Spot
0.00
20-Oct-10
5
0
20-Nov-10
20-Dec-10
20-Jan-11
20-Feb-11
20-Mar-11
Silver (US$/oz)
4.00
20
Share Price
8.00
Silver (US$/oz)
Share Price
20.00
30
50
Silver (US$/oz)
Endeavour Silver Corp. vs. Silver Spot
14.00
Bear Creek Mining
Corp (BCM-V)
• Valuation: $14.00 TP / SECTOR OUTPERFORM
• Market Cap: $844M / Cash: $131M
Corporate NAV Summary
NAV10%
Per Share
NAV8%
NAV5%
Mult
Interest
C$M C$/share C$M C$/share C$M C$/share
Santa Ana
1.50x
100%
184
$1.95
203
$2.15
Corani
1.00x
100%
782
$8.17
949
$9.94
1,298 $13.60
1,187 $12.45
1,535 $16.11
Project NAV
237
$2.51
Project NAV
965 $10.12
Corporate Adjustments
(37)
($0.40)
(37)
($0.40)
(37)
($0.40)
64
$0.69
64
$0.69
64
$0.69
9
$0.03
9
$0.03
9
$0.03
Cash and equivalents (2011 exit) *
ITM Cash *
Debt *
-
$0.00
-
$0.00
-
$0.00
Corporate NAV (excl ITM Cash)
26
$0.29
26
$0.29
26
$0.29
Corp + Proj NAV + Multiple
1.0x - 1.5x
* Based on 2011 exit shares outstanding 92M
1,083 $11.39
1,332 $14.00
1,680 $17.66
Fully-financed share base 95M
Bear Creek Mining
Corp (BCM-V)
Highlights:
• Santa Ana: Low Capex + Compelling Economics – US$70 M initial
Capex and LOM average US$9.86 / oz cash cost over 10.5 years. Haywood
forecasts 1.6 M oz 2012 production at US$10.47 / oz cash cost increasing to
4.3 M oz 2013 production at US$10.49 / oz cash cost.
• Corani: A Company Builder – Increased throughput (22,500 tpd from
15,000 tpd) = potential + 11.4 M average LOM silver production ounces a
year. Haywood currently models 15,000 tpd generating 7.7 M LOM oz/
year. BFS (Q3/11) anticipated.
• Silver Price Sensitivity – US$45 / oz Ag = Intrinsic Target of
$35.30/ share – Aligning our silver price deck with current US$45/oz
(leaving all other assumptions unchanged) delivers at intrinsic target of
$35.30 / share.
• An Estimated US$131 M in the Treasury Covers Funding for Santa
Ana – US$132M in the treasury funds US$70 M in initial capital costs at
Santa Ana (US$35 M in 2011 and 2012). Recently announced prepayment
of US$23 M consolidates property ownership of Corani at 100%.
Bear Creek Mining
Corp (BCM-V)
$11.00
$42
$37
$32
$7.00
$27
$5.00
$22
$3.00
$17
$1.00
$12
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10 10 10 10 10 10 11 11 11 11
BCM-V
Silver
US$ per oz
Share Price (CAD$)
$9.00
Mirasol Resources Ltd
(MRZ-V)
• Valuation: $8.75 TP / SECTOR OUTPERFORM
• Market Cap: $232M / Cash: $13M
Valuation Summary
Drill Defined Est Property Resource
Mt
g/t Ag
Moz Ag
100%
11.3
120 g/t
43.3
3.9
134 g/t
16.9
15.2
123 g/t
60.3
Joaquin
La Negra
La Morocha
Virginia (100%)
Julia North
Julia Central
Julia South
Julia Total
1.4
0.1
0.1
1.6
Valuation Parameters
EV / oz (US$)
Fwd Exchange Rate
Period Reference
Share Base Assumed
US$ 3.50/oz
0.99
Dec-11
FQ2/12
40.1 million
355 g/t
748 g/t
247 g/t
375 g/t
Haywood Est Attributable Resource Valuation Credit
Mt
g/t Ag
Moz Ag
@ US$3.50/oz
39%
4.4
120 g/t
16.9
58.7
1.5
134 g/t
6.6
23.0
5.9
123 g/t
23.5
81.7
Resource Upside (+25% )
5.9
20.4
15.6
2.8
347 g/t
30.7
2.8
0.3
764 g/t
8.0
1.0
0.3
246 g/t
2.1
19.4
3.3
380 g/t
40.9
Other Veins (valued at US$3.50/oz)
11.3
Resource Credit
per share
106.7
28.0
7.4
142.1
39.3
$283.5
$7.07
Property Portfolio Credit
per share
+ Cash (Dec-11) exit
per share
NAV
per share
$50.0
$1.25
$17.4
$0.43
$350.9
$8.75
Mirasol Resources Ltd
(MRZ-V)
Highlights:
• Joaquin (39% ownership) – On the Pathway to Development: With silver miner Coeur d’Alene Mines
(NYSE:CDE) as project operator and majority owner (61%), the Joaquin silver-gold property provides Mirasol with
a rapidly evolving advanced exploration opportunity. Haywood estimates 23.5 million silver equivalent ounces
attributable to Mirasol, or $82 million of value. Haywood anticipates an exploration budget of $3 million for
calendar 2011, funded by Coeur d’Alene Mines delivering +70 million ounce potential at Joaquin.
• Virginia (100% ownership) – The Near-Term Multimillion-Ounce Value Driver: With over 9 kilometres
of multiple silver-bearing veins (confirmed by rock chip and sampling programs) manifesting themselves as
outcrop and/or float, the prospectivity of the Virginia–Santa Rita project for high-grade silver is clear. Haywood
estimates 41 million ounces or $142 million of value for the Julia Vein plus 11 million ounce potential from other
veins. Haywood anticipates an exploration budget of $1.5 million for calendar 2011.
• Santa Cruz Province, Argentina + Northern Andes, Chile = An Impressive Land Position: An impressive
portfolio including twenty 100%-owned gold and silver projects in Santa Cruz Province, Argentina, provides
Mirasol with a pipeline of exploration projects. Area diversification is offered by its strategy of hunting for goldsilver deposits in Argentina and porphyry copper deposits in Chile. Haywood allocates $50 million of value for
Mirasol’s property portfolio (outside Joaquin and Virginia–Santa Rita). Haywood anticipates an exploration budget
of $2 million for the calendar year 2011.
• Mirasol = A Winning Team: This internationally recognized management team has an exceptional track record
of mineral discovery in South America.
• $13 Million in the Treasury: Mirasol’s estimated exploration expenditures of $3.5 million at Virginia and other
properties, $3 million at Joaquin (wholly financed by Coeur d’Alene Mines), in addition to $0.7 million in
forecasted corporate expenditures for the year are supported by a strong $14 million treasury.
Mirasol Resources Ltd
(MRZ-V)
$7.00
$42
$6.00
$37
$5.00
$32
$4.00
$27
$3.00
$22
$2.00
$1.00
$17
$0.00
$12
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10 10 10 10 10 10 11 11 11 11
MRZ-V
Silver
US$ per oz
Share Price (CAD$)
$8.00
Chris Thompson, M.Sc. (Eng),
P.Geo
cthompson@haywood.com
(604) 697-7433
PGM Fundamentals – Supply & Demand
Palladium Supply: 84% = South Africa & Russia
Palladium Demand: 60% = Autos
Palladium Supply
Palladium Mine Supply
Palladium Demand
17%
42%
63%
20%
12%
60%
6%
6%
South Africa
11%
42%
4%
Russia
Canada
17%
United States
Other
Mine Production
Secondary Supply
Platinum Supply: 78% = South Africa
ETF Holdings
Electronics
Auto
Dental
Platinum Demand: +48% = Autos
Platinum Mine Supply
Platinum Supply
Platinum Demand
21%
5%
2%
Other
26%
2%
15%
74%
78%
13%
5%
11%
48%
South Africa
Russia
Canada
United States
Other
Mine Production
Secondary Supply
ETF Holdings
Auto
Jewelry
Other
Chinese Demand
PGM Fundamentals - Trends
Palladium Price:
April 21: US$759
or 2.4:1 Pt : Pd
PGM Fundamentals –
Supply & Demand
Platinum Supply & Demand
Palladium Supply & Demand
900
9,000
900
800
8,000
800
700
7,000
700
6,000
600
5,000
500
4,000
400
300
3,000
300
200
2,000
200
100
1,000
100
'000 oz Platinum
6,000
600
5,000
500
4,000
400
3,000
2,000
1,000
-
-
2006
2007
Total Supply
2008
2009
Total Demand
2010e
2011e
2012e
Net Surplus or Deficit
1,000
-
-
2006
2007
Total Supply
2008
2009
Total Demand
Pt & Pd: Shrinking Supply / Demand Surplus - Deficit
2010e
2011e
2012e
Net Surplus or Deficit
Net surplus (deficit) in '000 oz
8,000
7,000
10,000
'000 oz Palladium
1,000
Net surplus (deficit) in '000 oz
9,000
PGM Fundamentals –
ETF Holdings
Platinum ETF Holdings
Palladium ETF Holdings
1,600
2,500
1,400
2,000
Thousands of troy ounces
1,000
800
600
1,500
1,000
400
500
200
-
April 2011 - Pt: 1.38 M oz or 19% of annual supply
April 2011 - Pd: 1.19 M oz or 28% of annual supply
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
-
Mar-10
Thousands of troy ounces
1,200
PGM Producers – CFPS
Multiples
Company
Ticker
S Price
MC
EV
CFPS (US$)
P/CFPS
2011/12
(US$)
(US$M)
(US$M)
2010
2011
2012
2010
2011
2012
Average
Anglo Platinum Ltd.
JSE:AMS
$97.88
$25,608
$26,300
$4.86
$8.08
$11.04
20x
12x
9x
10x
Anooraq Resources Corporation
TSXV:ARQ
$0.96
$406
$1,182
-$0.06
$0.03
$0.09
NMF
32x
11x
16x
Aquarius Platinum Ltd.
Eastern Platinum Limited
ASX:AQP
TSX:ELR
$5.62
$1.23
$2,643
$1,116
$2,545
$761
$0.27
$0.06
$0.40
$0.08
$0.62
$0.11
21x
21x
14x
16x
9x
11x
11x
13x
Impala Platinum Holdings Ltd.
JSE:IMP
$29.54
$18,194
$18,466
$1.44
$2.19
$2.90
21x
13x
10x
12x
Jubilee Platinum plc
AIM:JLP
$0.45
$115
$98
-$0.01
-$0.01
-$0.03
NMF
NMF
NMF
NMF
Lonmin plc
Mvelaphanda Resources Ltd.
LSE:LMI
JSE:MVL
$27.29
$0.60
$5,523
$131
$6,313
$692
$1.07
$0.26
$2.28
$0.27
$2.97
$0.29
26x
2x
12x
2x
9x
2x
10x
2x
North American Palladium Ltd.
TSX:PDL
$6.35
$1,030
$954
-$0.13
$0.32
$0.78
NMF
20x
8x
12x
Platmin Limited
TSX:PPN
$0.82
$746
$709
-$0.09
$0.16
$0.16
NMF
5x
5x
5x
Royal Bafokeng Platinum Limited
Stillwater Mining Co.
JSE:RBP
NYSE:SWC
$9.97
$21.70
$1,632
$2,235
$1,968
$2,223
$0.63
$1.31
$0.62
$2.54
$0.75
$3.15
16x
17x
16x
9x
13x
7x
15x
8x
Zimplats Holdings Ltd.
ASX:ZIM
$13.44
$1,446
$1,458
N/A
N/A
N/A
NMF
NMF
NMF
N/A
Average
28x
20x
15x
17x
* Priced as of Thursday, April 21, 2011
Source: Bloomberg CFPS Consensus Estimates, Capital IQ
A Broad Range : P / CF: 2x to 17x
PGM Equity Performance
Returns
Group Avg
TSX
TSXV
Platinum
Palladium
Rhodium
40%
1.20
ARM
20%
CSI
1.00
XTA
GMKN
AAL
RBP
SWC
0.80
LMI
AQP
PPN
IMP
-20%
PDL
ZIM
NKWE.F
JLP
0.60
ELR
ARQ
-40%
0.40
-60%
0.20
-80%
90 Day Performance: -90 % to 20%
MVL
Apr-18
Apr-14
Apr-10
Apr-06
Apr-02
Mar-29
Mar-25
Mar-21
Mar-17
Mar-13
Mar-09
Mar-05
Mar-01
Feb-25
Feb-21
Feb-17
Feb-13
Feb-09
Feb-05
Feb-01
Jan-28
-
Jan-24
-100%
Jan-20
Period Return
AMS
NHM
Indexed Performance
0%
North American Palladium
(PDL-T)
• Valuation: $8.35 TP / SECTOR OUTPERFORM
• Market Cap: $965M / Cash: $117M
Operating Cash Flow (CAD$) 2010E
2011E
2012E
2013E
2014E
Sleeping Giant Mine
per share
(16.2)
(0.10)
3.9
0.02
37.8
0.22
43.1
0.25
27.9
0.16
Lac des Iles
per share
Corporate Adjustments
per share
6.6
0.04
(9.6)
(0.06)
(4.8)
(0.04)
62.2
0.36
66.1
0.39
(12.1)
(0.07)
104.2
0.61
142.1
0.83
(12.1)
(0.07)
113.4
0.66
156.5
0.91
(12.1)
(0.07)
147.1
0.86
175.0
1.02
(12.1)
(0.07)
Operating Cash Flow
per share
(14.4)
(0.10)
54.0
0.31
129.9
0.76
144.4
0.84
162.9
0.95
per share
Project CF
Target Price Metric 11.0x 2012 OCF
Target Price
$8.35
NAV7%
C$M C$/share
Per Share
Interest
Project NAV
Sleeping Giant Mine 100%
154
$0.89
Lac des Iles
100%
565
$3.26
Project NAV
719
$4.16
Corporate Adjustments
(68) ($0.39)
Cash and equivalents *
26
$0.15
ITM Cash *
28
$0.10
Debt *
$0.00
Corporate NAV (excl ITM Cash) (42) ($0.24)
Corp + Proj NAV
1.00x
678
$3.92
* Based on 2011 exit shares outstanding 172M
NAV5%
C$M C$/share
166
610
775
(75)
26
28
(49)
727
$0.96
$3.52
$4.48
($0.43)
$0.15
$0.10
$0.00
($0.28)
$4.20
NAV3%
C$M C$/share
178
659
838
(83)
26
28
(57)
781
$1.03
$3.81
$4.84
($0.48)
$0.15
$0.10
$0.00
($0.32)
$4.52
North American
Palladium (PDL-T)
Highlights:
• Over 3x Pd production growth by 2015 – PDL’s aggressive development plan for
the Offset Zone is 309 Koz of Pd production in 2015 at a US$125/oz Pd cash cost net
of credits, compared with 95 Koz at US$283/oz for 2010.
• Growing gold division – Growth comes from redevelopment of the Sleeping Giant
mine and the estimated production from Vezza in 2012. Production growth and
operating costs from 18 Koz in 2010 at a cash cost of US$1,549/oz to 65 Koz in 2012
at a cash cost of US$739/oz. Further growth (not modelled) offers additional growth
potential from satellite deposits (Flordin and Discovery) feeding the Sleeping Giant
mill.
• Significant growth in cash flow anticipated – Cash flow of $0.31 estimated for
2011 growing to $0.76 in 2012, $0.84 in 2013, $0.95 in 2014 and $1.02 in 2015.
• Robust Pd prices + higher grades + low operating costs = further upside –
Fundamentals for PGM remain firm, supported by growth in demand, investor
interest, and uncertainty about supply from the Republic of South Africa and
depletion of Russian stockpiles.
North American
Palladium (PDL-T)
$8.00
$815
$7.00
$6.00
$615
$5.00
$515
$4.00
$415
$3.00
$315
$2.00
$215
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10 10 10 10 10 10 11 11 11 11
PDL-T
Palladium
US$ per oz
Share Price (CAD$)
$715
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