Trevali Mining Corp. (TV-T, $0.96) - Stockhouse

Radar Flash – January 7, 2014

Trevali Mining Corp. (TV-T, $0.96) Rating Target Price Return Risk Profile

Buy $1.15 20% Very High

Stefan Ioannou, PhD416-507-2309[email protected] Evan Young, MS, DIC416-507-2703[email protected] Analyst Certification, Important Information and Legal Disclaimers: See page 8

Strong Santander Ramp-Up Performance Continues Through December Valuation  We base our formal valuation on a 1.0x multiple to a fully finance58d after-tax corporate NAV10% of $1.10 per fully diluted share at Haywood’s long-term forecast zinc price of US$1.15/lb. A change of US$0.10/lb in long-term zinc price impacts our target by ~$0.28 per share (~24%), providing investors with strong leverage to the metal.

Impact – Positive (neutral to our formal valuation)  Ramp-up continues to progress well at Trevali’s 100% owned Santander zinc-lead-silver mine in Peru. We anticipate the operation will be in a position to declare commercial production (early) this quarter. In particular, we note:  During December, Santander continued to maintain mill throughput at the plant’s full 2,000 tpd nameplate capacity (~60,000 tonnes for the month), giving an effective plant availability of 100% for the third straight month.  Head grades during December averaged 3.6% zinc, 1.5% lead, and ~44 g/t silver. Below grades milled during October and November (refer to Radar Screen, November 4, 2013 and December 12, 2013), but generally in line with Santander’s National Instrument 43-101 compliant measured and indicated resource grade. We note that Trevali fast-tracked the project into production through a toll-milling and offtake agreement with Glencore, and the Company has not published a National Instrument 43-101 compliant technical study outlining the details [annualized mine plan / head-grade profile] of a modern mining operation at Santander.  Metallurgical performance increased month-over-month in December, averaging 82% for zinc and 84% for lead, up from 80% and 82% respectively during November. However, average zinc recovery remains below levels seen in October (85%) as commissioning during November and December utilized a blend of underground ore and re-mined historical “high-grade” tailings (versus 100% underground hard rock feed in October). Overall, plant performance is expected to continue improving as ramp-up ensues and future feed is sourced entirely from the underground mine including the recently discovered Rosa Zone (refer to Radar Screen, December 12, 2013). In addition, ongoing mill optimization, including the installation of a second lead filter (recently completed) and Courier on-stream analyzer (scheduled for commissioning in early Q1/14), is expected to enhance the operation (noting target zinc and lead recoveries of ~80% and ~90% respectively in our model).  During December, Trevali delivered/sold 3,900 tonnes of zinc concentrate and 2,300 tonnes of lead-silver concentrate worth ~US$6.1M (at US$0.90/lb of zinc, US$0.97/lb of lead, and US$19.65/oz of silver) to Glencore. Trevali began initial concentrate trucking to the Port of Callao in Lima in early October. Following a planned ~US$20M mill expansion to +4,000 tpd in +2015 (US$30M / 2016 in Haywood model; functional in early 2017; likely funded, in part, by a lease-back agreement with Glencore), the project is expected to produce ~80 Mlb of zinc per annum. Our model includes a modest US$15M top-up equity financing in 2015 to partially fund this expansion. Target Price Current Price Return YTD Performance

$1.15 $0.96 20% (5%)

Overall Risk Rating Very High Forecast Risk (High) 7 Financial Risk (Moderate) 6 Valuation Risk (Moderate) 5 Political Risk (Moderate) 6 Risk Profile Definitions: See page 11

52-Week High / Low Shares O/S

$1.19 / $0.49 279.3M (basic) 293.7M (F/D) Market Capitalization $249.3M Cash $48.9M Debt $31.8M Working Capital $11.2M Enterprise Value $269.9M Daily Volume (3-month average) 364,705 Website www.trevali.com CEO Mark Cruise Currency C$ unless noted

Price Performance

Source: Capital IQ and Haywood Securities

Member of the Canadian Investor Protection Fund

Please see Rating Structure, Disclaimers, and notes on pages 8-11.

Trevali Mining Corp. (TV-T)

1/7/14

 Trevali is more than a one-trick pony. The Company’s 100% owned Bathurst project in New Brunswick is comprised of three deposits (Halfmile, Caribou, and Stratmat) and the Caribou mill complex. Established infrastructure associated with the world-class Bathurst mining camp has positioned the project for an expedited restart currently targeted in late 2014, which is expected to ramp-up to ~130 Mlb per annum (Haywood model). Our formal valuation includes initial concentrate production at the Bathurst project (Caribou mill) in early 2015—a timeline we will continue to monitor closely. Funds from a US$30M mezzanine debt facility announced in May 2013 (refer to Radar Screen, May 2, 2013) enabled Trevali to order Caribou’s semi-autogenous grinding (SAG) mill, the project’s critical-path item. Fabrication of the 3,000 tpd unit (in Belgium; Farnell-Thompson Equipment Incorporated) is complete, and key components are now on-site (refer to Radar Screen, December 12, 2013).  We continue to believe timely execution at Santander and Bathurst will be key to maintaining market confidence (especially given the market’s current sentiment towards the resource sector). That said, with zinc production from two mines expected to ramp-up to ~210 Mlb per annum by ~2017, we believe Trevali is poised to become a (the) marquee mid-tier zinc producer in a market facing a significant medium-term supply issue. This zinc market outlook is underpinned by a number of key mine shutdowns (accounting for ~11% of global supply) expected within the next 3 years and a lack of new significant advanced-stage projects positioned to replace them (refer to Radar Screen, October 22, 2013). Furthermore, unlike copper, we would argue the list of 'good' zinc-focused equity names can be counted on one hand, which will likely attract additional market attention to Trevali. Significant by-product lead and silver credits at Bathurst and Santander account for ~30% of the Company’s life-of-mine gross revenue in our model and translate into a corporate life-of-mine average total zinc cash cost of US$0.60/lb net of by-product credits—positioning the Company within the upper quartile of the zinc cost curve.  Trevali initially fast-tracked the Halfmile mine towards commercial production start-up through a toll-milling agreement with Glencore Xstrata, which significantly reduced the project’s financial risk profile. The Company has since shifted its focus to underground development and mine planning ahead of the anticipated restart of its own Caribou mill targeted in (late) 2014, which was formally acquired in November 2012. The $22M purchase price was made in the form of Trevali equity. Outstanding funding to refurbish the mine and mill complex (estimated at ~$35M in our model) is more than covered, in theory, by a recently completed $46M equity financing. A US$20M working-capital facility from Glencore and net proceeds of a pending US$35M senior debt and prepaid precious metals facility from RMB are expected to cover outstanding short-term capital and cash-management requirements at Santander. Hence, Trevali is hypothetically fully funded to establish commercial production in Peru and New Brunswick within the next year. That said, Trevali will not generate enough near-term free cash flow in our model to satisfy Q4/14 working-capital requirements or internally finance a planned expansion at Santander that is targeted for completion in +2015 (2016 in Haywood model; functional in early 2017). The Company anticipates the ~US$20M expansion will be funded by Glencore (in exchange for additional concentrate offtake). However, a formal agreement has not been established. Our formal valuation includes additional consideration for this anticipated (modest) financing(s)—namely a modest US$10M equity financing in Q3/14, priced at $0.85 per share (12.4M shares; 4% basic dilution).  We acknowledge that our target price of $1.15 per share falls near the lower end of analyst consensus valuations for Trevali (target price range of $1.05 to $2.25 per share; $1.46 average [Bloomberg]). We remain cognizant of the challenges every mining company faces with respect to timely cost-effective production start-up at one, let alone two, operations. Our arguably conservative valuation reflects a cautious stance given Trevali’s near-term efforts to initiate zinc production simultaneously in Peru and New Brunswick. That said, the Company has significantly advanced both projects—enhancing resources, establishing partnerships, securing project financing, and acquiring/developing key infrastructure. Hence, successful project execution in conjunction with anticipated medium-term zinc price strength should garner a higher valuation. We note our model includes 2017E CFPS of US$0.35. Trevali’s peer group of mid-tier base metals producers currently trades at +5.0x annualized operating cash flow per share (CFPS), implying a target price on the order of ~$1.75 per share once the Company establishes a steady-state (expanded) production profile.

Catalysts  1) Commercial production declaration at Santander (Q1/14); 2) Production start-up at Bathurst (late 2014 Company target; early 2015 Haywood model); 3) Zinc price appreciation (+2014).

Stefan Ioannou, PhD416-507-2309[email protected]

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1/7/14

Santander Initial Production Metrics and Haywood Outlook Actual Production Results Since Start-up September (mid-August 2013) 2013A Ore Tonnes Milled, 000's

Haywood Estimates October 2013A

November 2013A

December 2013A

2013E

2014E

252

-

64*

59*

59*

252

730

-

5.3% 1.6% 58

4.4% 1.8% 55

4.7% 1.6% 65

3.6% 1.5% 48

4.2% 1.4% 48

3.9% 1.4% 46

81% 80% 66%

81% 78% 63%

85% 83% 69%

80% 82% 67%

82% 84% 70%

81% 80% 66%

80% 90% 65%

Zinc Concentrate Production, DMT Zinc Concentrate Zinc Grade, %

16,700 49%

-

4,885* 49%*

4,600* 48%*

3,400* 50%*

16,700 49%

44,300 51%

Lead Concentrate Production, DMT Lead Concentrate Lead Grade, % Lead Concentrate Silver Grade, oz/ton

5,200 55% 49

-

1,631* 55%* 43*

1,350* 55%* 59*

1,300* 55%* 46*

5,200 55% 49

22,600 40% 40

Zinc Production (in zinc concentrate), Mlb Lead Production (in lead concentrate), Mlb Silver Production (in concentrate), koz

18.0* 6.3* 255*

-

5.3* 2.0* 70*

4.9* 1.6* 80*

3.8* 1.6* 60*

18 6 255

50 20 703

Zinc Head Grade, % Lead Head Grade, % Silver Head Grade, g/t Zinc Recovery (to zinc concentrate), % Lead Recovery (to lead concentrate), % Silver Recovery (to concentrate), %

* Denotes calculated values based on actual reported figures. Reported September 2013A head grades reflect average from September 17th to September 30th.

Source: Trevali Mining and Haywood Securities

Corporate Metal Production Profile (Bathurst and Santander; Haywood model) Zinc Production

Lead Production

Zinc Equivalent Production

Cash Cost

$1.20

350

$1.05

300

$0.90

250

$0.75

200

$0.60

150

$0.45

100

$0.30

50

$0.15

0

Total Zinc Cash Cost (net of credits, including royalties; US$/lb)

Payable Production (Mlb)

400

$0.00 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 Year Zinc Equivalent Production is calculated using Haywood's formal metal price assumptions (refer to Radar Screen, October 22, 2013).

Source: Haywood Securities


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1/7/14

Investment Thesis Trevali is working to initiate zinc production at two mines within the next year. The Company’s 100% owned Bathurst project in New Brunswick comprises three deposits (Halfmile, Caribou, and Stratmat) and the Caribou mill complex. Established infrastructure associated with the world-class Bathurst mining camp has positioned the project for an expedited restart targeted in (late) 2014, which is anticipated to ramp-up to ~130 million pounds per annum (Haywood model). In addition, the Company’s 100% owned Santander mine in Peru ramped-up to nameplate throughput capacity (2,000 tonnes per day) in late September. Following a mill expansion planned in +2015 (2016 in Haywood model; functional in early 2017), the operation is expected to produce ~80 million pounds of zinc (in concentrate) per annum. Trevali’s production profile extends beyond zinc. Significant byproduct lead and silver credits at Bathurst and Santander account for approximately 30% of the Company’s life-of-mine gross revenue in our model and translate into a corporate life-of-mine average total zinc cash cost of US$0.60 per pound net of by-product credits—positioning the Company within the upper quartile of the zinc cost curve. With zinc production from two mines anticipated to ramp-up to ~210 million pounds per annum by ~2017, we believe Trevali is poised to become a (the) marquee mid-tier zinc producer in a market facing a significant medium-term supply issue. This zinc market outlook is underpinned by a number of key mine shutdowns (accounting for ~11% of global supply) expected within the next 3 years and a lack of new significant advanced-stage projects positioned to replace them. Furthermore, unlike copper, we would argue the list of ‘good’ zinc-focused equity names can be counted on one hand, which will likely attract additional market attention to Trevali. In addition to its concentrate offtake partnership already in place with Glencore Xstrata, we remain cognizant that Trevali’s anticipated production profile, backed by high grades, low capital-cost intensity, established infrastructure, and politically stable project addresses could attract significant third-party interest, likely in the form of an established base metals producer looking to increase its zinc production profile. Hence, corporate activity is a notable wildcard catalyst that could drive the Company’s market valuation higher. We continue to recommend Trevali Mining Corp. (TV-T) with a BUY rating and a target price of $1.15. We acknowledge that our target price of $1.15 per share falls near the lower end of analyst consensus valuations for Trevali (target price range of $1.05 to $2.25 per share; $1.46 average [Bloomberg]). We remain cognizant of the challenges every mining company faces with respect to timely cost-effective production start-up at one, let alone two, operations. Our arguably conservative valuation reflects a cautious stance given Trevali’s near-term efforts to initiate zinc production simultaneously in Peru and New Brunswick. That said, the Company has significantly advanced both projects—enhancing resources, establishing partnerships, securing project financing, and acquiring/developing key infrastructure. Hence, successful project execution in conjunction with anticipated medium-term zinc price strength should garner a higher valuation. We note our model includes 2017E CFPS of US$0.35. Trevali’s peer group of mid-tier base metals producers currently trades at +5.0x annualized operating cash flow per share (CFPS), implying a target price on the order of ~$1.75 per share once the Company establishes a steady-state (expanded) production profile.


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Risks Significant Investment Risks The investment to which this report relates carries various risks, which are reflected in our Overall Risk Rating. We consider following to be the most significant of these investment risks:  Trevali fast-tracked the development of the Halfmile mine without the publication of an up-todate National Instrument 43-101 compliant technical report (i.e., mine plan). As a result, our formal valuation is based on project parameters derived from a combination of an (out of date) October 2010 Preliminary Economic Assessment (PEA), conceptual Company guidance, and peergroup comparables. We remain cognizant that Trevali’s current production planning may include batch processing Halfmile and Caribou ore given the deposits’ contrasting grinding requirements—a practice we will monitor closely. Furthermore, Trevali has also fast-tracked the Santander project into production through a toll-milling and offtake agreement with Glencore. Trevali has not published any National Instrument 43-101 compliant technical studies outlining the details of a modern mining operation at Santander. Thus, our formal Santander valuation is based on conceptual Company guidance and peer-group comparables only. Ongoing/future development at Santander also appears to be taking place in lieu of publicly available technical documentation—in part illustrated by Trevali’s recent initiative to fast-track underground development on four sublevels at the Rosa Zone. Hence, we consider forecast risk as high.  Trevali initially fast-tracked the Halfmile mine towards commercial production start-up through a toll-milling agreement with Glencore Xstrata, which significantly reduced the project’s financial risk profile. The Company has since shifted its focus to underground development and mine planning ahead of the anticipated restart of its own Caribou mill targeted in (late) 2014, which was formally acquired in November 2012. The $22 million purchase price was made in the form of Trevali equity. Outstanding funding to refurbish the mine and mill complex (estimated at ~$35 million in our model) is more than covered, in theory, by a recently completed $46 million equity financing. A US$20 million working-capital facility from Glencore and net proceeds of a pending US$35 million senior debt and prepaid precious metals facility from RMB are expected to cover outstanding short-term capital and cash-management requirements at Santander. Hence, Trevali is hypothetically fully funded to establish commercial production in Peru and New Brunswick within the next year. That said, Trevali will not generate enough near-term free cash flow in our model to satisfy Q4/14 working-capital requirements or internally finance a planned expansion at Santander that is targeted for completion in +2015 (2016 in Haywood model; functional in early 2017). The Company anticipates the ~US$20 million expansion will be funded by Glencore (in exchange for additional concentrate offtake). However, a formal agreement has not been established. Our formal valuation includes additional consideration for this anticipated (modest) financing(s). However, it is pro forma in nature.  Despite significant by-product lead and silver credits, Trevali’s opex profile in our model falls within the upper quartile of the zinc cost curve. At current spot pricing, the Company’s corporate life-of-mine average total zinc cash cost net of by-product credits increases to ~US$0.75/lb. Hence, we remain cognizant of the zinc price’s languishing performance (Q4/13A average of US$0.86/lb), which continues to squeeze the already tight margins of a number of higher cost producers. Our Risk Profile Parameters ratings and Overall Risk Rating are set out on the cover page and are explained in our Rating Structure section under “Overall Risk Rating” and “Risk Profile Parameters”. These ratings are an integral part of our Report. Stefan Ioannou, PhD416-507-2309[email protected]

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Target Price, C$ Current Price, C$ Return, % 52-Week High / Low, C$ Daily Volume (100-day avg)

Trevali Mining Corp. (TV-T) Rating: BUY Target Price: C$1.15 Target Price Metric: 1.0x After-Tax Corporate NAV10% Balance Sheet and Capitalization

1/7/14

279.3 Shares O/S, million 293.7 Shares F/D, million $255.4 Market Capitalization, US$M Mark Cruise Company CEO www.trevali.com Company Web Site

$1.15 $0.96 20% $1.19 / $0.49 364,705

Share Capital Dilution US$M $255.4 $50.1 $13.0 $11.5 ($32.6) $240.5 $276.4

Market Capitalization Current Cash F/D Cash Adds Working Capital Long-term Debt Book Value Enterprise Value (EV)

US$ / O/S Share $0.91 $0.18 $0.05 $0.04 ($0.12) $0.86 $0.99

C$M $268.2 $52.6 $13.6 $12.1 ($34.2) $252.5 $290.3

C$ / O/S Share $0.96 $0.19 $0.05 $0.04 ($0.12) $0.90 $1.04

EV = Market Capitalization - Working Capital + Long-term Debt C$/US$ FX Rate:

1.05

Financial Forecast Forecast Zinc Price, US$/lb Forecast Lead Price, US$/lb Forecast Silver Price, US$/oz C$/US$ FX Rate Shares O/S, millions Gross Sales Revenue, US$M Net Revenue, US$M Cost of Sales, US$M Corporate G&A, US$M EBITDA, US$M EV / EBITDA DD&A, US$M Gain on Derivative Instruments, US$M Earnings, US$M EPS, US$ Current Price / EPS Target Price / EPS Operating Cash Flow, US$M CFPS, US$ Current Price / CFPS Target Price / CFPS DACF, US$M Current EV / DACF Implied EV / DACF Target Price Multiple CAPEX, US$M Proceeds from Equity Financing, US$M Proceeds from Debt Financing, US$M Debt Repayment, US$M Free Cash Flow, US$M FCPS, US$

2014 $1.00 $1.00 $24.00 1.05 284 $77 $63 ($63) ($5) ($5) ($7) ($14) ($30) ($0.11) ($9) ($0.03) ($6) ($39) $10 $15 ($40) ($43) ($0.15)

2015 $1.20 $1.20 $24.00 1.04 292 $278 $236 ($152) ($5) $76 3.6x ($39) $0 $19 $0.07 14.0x 16.8x $65 $0.22 4.1x 5.0x $67 4.2x 5.0x ($41) $15 $0 ($9) $30 $0.10

2016 $1.20 $1.20 $24.00 1.04 292 $337 $287 ($172) ($5) $106 2.6x ($45) $0 $30 $0.10 9.1x 10.9x $88 $0.30 3.1x 3.7x $89 3.1x 3.7x ($56) $0 $0 ($9) $23 $0.08

2017 $1.15 $1.15 $24.00 1.07 292 $406 $343 ($201) ($5) $133 2.1x ($53) $0 $44 $0.15 6.0x 7.2x $101 $0.35 2.6x 3.1x $102 2.7x 3.2x ($41) $0 $0 ($8) $52 $0.18

2018 $1.15 $1.15 $24.00 1.09 292 $406 $343 ($198) ($5) $135 2.0x ($53) $0 $45 $0.16 5.7x 6.8x $94 $0.32 2.7x 3.3x $94 2.9x 3.3x ($41) $0 $0 ($3) $50 $0.17

2019 $1.15 $1.15 $24.00 1.10 292 $399 $337 ($188) ($5) $139 2.0x ($53) $0 $47 $0.16 5.4x 6.4x $96 $0.33 2.7x 3.2x $96 2.9x 3.3x ($41) $0 $0 ($1) $54 $0.19

Operating Cash Flow and Debt Adjusted Cash Flow (DACF) excludes working capital changes.

Bathurst Production Profile (100% basis) Ore Tonnes Milled, millions Ore Tonnes Milled, tonnes per day Zinc Grade Milled, % Lead Grade Milled, % Silver Grade Milled, g/t Zinc Recovery, % Lead Recovery, % Silver Recovery, % Payable Zinc Production, Mlb Payable Lead Production, Mlb Payable Silver Production, Moz Total On-Site Operating Cost, C$/tonne milled Total Zinc Cash Cost (NoC; IR), US$/lb

2014 -

2015 1.1 3,000 6.6% 2.3% 42 80% 65% 45% 106 33 0.6 $110 $0.75

2016 1.3 3,500 6.6% 2.3% 47 85% 70% 50% 133 43 0.8 $110 $0.60

2017 1.3 3,500 6.6% 2.3% 47 85% 70% 50% 133 43 0.8 $110 $0.60

2018 1.3 3,500 6.6% 2.3% 47 85% 70% 50% 133 43 0.8 $110 $0.60

RLOM 26.2 3,500 6.2% 2.3% 36 85% 70% 50% 2,591 871 13.1 $110 $0.65

NoC = net of credits; ER = excluding royalties; IR = including royalties.

Santander Production Profile (100% basis) Ore Tonnes Milled, millions Ore Tonnes Milled, tonnes per day Zinc Grade Milled, % Lead Grade Milled, % Silver Grade Milled, g/t Zinc Recovery, % Lead Recovery, % Silver Recovery, % Payable Zinc Production, Mlb Payable Lead Production, Mlb Payable Silver Production, Moz Total On-Site Operating Cost, US$/tonne milled Total Zinc Cash Cost (NoC; IR), US$/lb

2014 0.7 2,000 3.9% 1.4% 46 80% 90% 65% 42 19 0.6 $90 $1.00

2015 0.7 2,000 3.6% 1.3% 43 80% 90% 65% 40 18 0.6 $60 $0.50

2016 0.7 2,000 3.6% 1.3% 43 80% 90% 65% 40 18 0.6 $60 $0.50

2017 1.5 4,000 3.6% 1.3% 43 80% 90% 65% 79 36 1.2 $55 $0.40

2018 1.5 4,000 3.6% 1.3% 43 80% 90% 65% 79 36 1.2 $55 $0.40

RLOM 12.9 4,000 4.2% 0.8% 31 80% 90% 65% 809 201 7.7 $50 $0.60

NoC = net of credits; ER = excluding royalties; IR = including royalties.

Attibutable Corporate Production Profile Zinc Production (in concentrate), Mlb Lead Production (in concentrate), Mlb Payable Zinc Production, Mlb Payable Lead Production, Mlb Zinc Sales, Mlb Lead Sales, Mlb Total Zinc Cash Cost (net of credits), US$/lb

2014 50 20 42 19 42 19 $1.00

2015 171 53 146 50 146 50 $0.65

2016 202 64 172 61 172 61 $0.60

2017 249 83 212 79 212 79 $0.50

2018 249 83 212 79 212 79 $0.50

RLOM 4,000 1,128 3,400 1,071 3,400 1,071 $0.60

2014 -

2015 1,200 $500 560 $18.50

2016 1,200 $500 560 $18.50

2017 1,200 $500 560 $18.50

2018 1,200 $500 560 $18.50

RLOM 6,000 $500 2,800 $18.50

Year

Quarter

2014 2015

Q3 Q1

Hedge Position Forward Gold Sales, oz Forward Gold Sales Price, US$/oz Forward Silver Sales, koz Forward Silver Sales Price, US$/oz

Warrants Options Warrants + Options

Number 6.1M 7.0M 13.1M

Price C$1.06 C$1.02 C$1.04

Proceeds US$6.1M US$6.8M US$13.0M

Expiry Apr 2013 - July 2014 May 2013 - Feb 2016 C$/US$ FX Rate:

1.05

Recent Equity Financings November 28, 2013 - C$46.0M bought deal private placement (55.4M sh @ C$0.83 per sh) June 12, 2013 - C$10.9M bought deal private placement (18.2M sh @ C$0.60 per sh) March 28, 2013 - C$5.0M bought deal FT private placement (5.0M FT sh @ C$1.00 per sh) July 25, 2012 - C$15.5M bought deal FT private placement (15.0M FT sh @ C$1.03 per sh) March 2, 2012 - US$18M non-brokered private placement to Glencore (12.6M sh @ C$1.42 per sh) Major Shareholders IA Michael Investments MMC Holding Blackrock CIBC Management and Directors Total

O/S (millions) 40.0 19.8 6.1 4.5 2.6 279.3

Corporate NAV Summary and Sensitivity Forecast Zinc Price, US$/lb Forecast Lead Price, US$/lb Haywood Model Forecast Silver Price, US$/oz Forecast C$/US$ FX Rate Corporate Adjustments, US$M ($43) Bathurst After-Tax Project NAV10%, US$M $136 Santander After-Tax Project NAV10%, US$M $161 Additional Exploration Credit, US$M $79 Corporate NAV, US$M $333 Corporate Adjustments, C$ / F/D share ($0.14) Bathurst After-Tax Project NAV10%, C$ / F/D share $0.45 Santander After-Tax Project NAV10%, C$ / F/D share $0.53 Additional Exploration Credit, C$ / F/D share $0.26 Corporate NAV, C$ / F/D share $1.10 Current Price / Corporate NAV 0.9x Target Price / Corporate NAV 1.0x 2014E CFPS, US$ ($0.03) 2015E CFPS, US$ $0.30

$0.50 $0.50 $10.00 1.20 ($43) ($662) ($255) $79 ($881) ($0.16) ($2.49) ($0.96) $0.30 ($3.32) ($0.19) ($0.23)

O/S (%) 14% 7% 2% 2% 1% 26%

$1.00 $1.00 $20.00 1.10 ($43) ($13) $94 $79 $118 ($0.15) ($0.04) $0.33 $0.27 $0.41 2.4x 2.8x ($0.04) $0.11

F/D (millions) 40.0 19.8 6.1 4.5 2.6 293.7

$1.50 $1.50 $30.00 1.00 ($43) $373 $306 $79 $716 ($0.13) $1.17 $0.96 $0.25 $2.25 0.4x 0.5x $0.09 $0.39

$2.00 $2.00 $40.00 0.90 ($43) $735 $501 $79 $1,272 ($0.12) $2.07 $1.41 $0.22 $3.59 0.3x 0.3x $0.20 $0.54

Model shares F/D (fully financed):

Corporate Metal Inventory - Model Mineable, Reserve, and Resource Tonnes Zn Grade ZnEq Grade (%) (%) (000's) Bathurst Model Mineable (100%) 25,501 6.40% 11.35% Bathurst Model Payable (100%) Santander Model Mineable (100%) 13,187 4.17% 6.22% Santander Model Payable (100%) Total Model Mineable 38,687 5.64% 9.60% Total Model Payable Bathurst P&P Reserve (100%) Santander P&P Reserve (100%) Total P&P Reserve Bathurst M&I Resource (100%) 13,492 7.52% 13.88% Santander M&I Resource (100%) 7,920 3.44% 5.66% Total M&I Resource 21,412 6.01% 10.84% Bathurst Inferred Resource (100%) 15,263 6.54% 12.01% Santander Inferred Resource (100%) 13,845 4.62% 5.97% Total Inferred Resource 48,862 3.95% 7.37% Bathurst Reserve and Resource (100%) 28,755 7.00% 12.89% Santander Reserve and Resource (100%) 21,765 4.19% 5.86% Total Reserve and Resource 70,274 4.58% 8.43%

Zinc (Mlb) 3,600 2,594 1,211 824 4,811 3,418 2,237 600 2,837 2,201 1,410 4,252 4,438 2,010 7,088

ZnEq (Mlb) 6,381 4,198 1,809 1,196 8,190 5,394 4,130 988 5,118 4,040 1,822 7,942 8,170 2,810 13,060

F/D (%) 14% 7% 2% 2% 1% 25% Spot $0.93 $0.98 $19.72 1.08 ($43) ($73) $70 $79 $33 ($0.14) ($0.25) $0.24 $0.27 $0.11 8.6x 10.3x ($0.05) $0.07 319M

EV/lb ZnEq

(US$/lb) $0.034 $0.051 $0.021

Measured and indicated resource is additional to proven and probable reserve.

Trevali Mining Corp. Consensus Estimate Summary (Reuters data sourced via Capital IQ) Analysts Mean EPS High / Low Haywood vs. Cons. Mean CFPS High / Low Haywood vs. Cons. US$0.10 US$0.18 / US$0.01 (205%) US$0.15 US$0.22 / US$0.02 (121%) 2014 Consensus Estimate 6 US$0.34 US$0.39 / US$0.28 (81%) US$0.29 US$0.51 / US$0.23 (23%) 2015 Consensus Estimate 2 Analysts SO Rating SP Rating SU Rating Mean Target High / Low Haywood vs. Cons. US$1.39 US$1.80 / US$1.05 (17%) Consensus Valuation 7 7 Peer-Group Comparables (Haywood Securities estimates) Share Price Corp NAV Price / NAV 0.9x Trevali Mining Corp. (TV-T) C$0.96 US$1.06 0.7x Capstone Mining Corp. (CS-T) C$2.95 US$4.34 0.5x Castle Resources Inc. (CRI-V) C$0.05 US$0.09 Copper Mountain Mining Corp. (CUM-T) 0.4x C$1.63 US$3.62 0.6x Coro Mining Corp. (COP-T) C$0.10 US$0.17 First Quantum Minerals Ltd. (FM-T) 1.5x C$18.90 US$11.84 0.5x Foran Mining Corp. (FOM-V) C$0.17 US$0.32 1.0x HudBay Minerals Inc. (HBM-T) C$8.56 US$8.67 0.8x Lundin Mining Corp. (LUN-T) C$4.65 US$5.84 0.9x Nevsun Resources Ltd. (NSU-T) C$3.70 US$4.09 0.7x Royal Nickel Corp. (RNX-T) C$0.34 US$0.47 0.5x Sunridge Gold Corp (SGC-V) C$0.16 US$0.33 0.8x Zazu Metals Corp. (ZAZ-T) C$0.56 US$0.69 Peer-Group Average (producers) 0.9x Peer-Group Average (developers) 0.6x Peer-Group Average (all) 0.7x

2013E CFPS Price / CFPS 2014E CFPS Price / CFPS

(US$0.02) US$0.25 (US$0.01) US$0.38 (US$0.00) US$2.00 (US$0.02) US$0.12 US$0.60 US$0.30 (US$0.08) (US$0.01) (US$0.03)

11.7x 4.2x 9.2x 70.1x 7.5x 11.8x 19.1x 19.1x

(US$0.03) US$0.60 (US$0.01) US$0.65 (US$0.02) US$2.50 (US$0.01) US$0.70 US$0.80 US$0.80 (US$0.03) (US$0.01) (US$0.03)

4.7x 2.4x 7.2x 11.6x 5.5x 4.4x 6.0x 6.0x

2013E C$/US$ FX Rate:

1.03

2014E C$/US$ FX Rate:

1.05

Modelled Equity Financings

Current O/S Share Capital Current F/D Share Capital Modelled Interim Equity Financing Modelled Santander Equity Financing Modelled Fully Financed F/D Share Capital

Amount Price (US$M) (C$/share)

$10 $15

C$0.85 C$1.25

Shares (millions) 279 294 12 13 319

Stefan Ioannou, Ph.D. - Mining Analyst [email protected] 416-507-2309

Evan Young - Research Associate [email protected] 416-507-2703

Source: Trevali Mining, Capital IQ, and Haywood Securities


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Trevali Mining Corp. (TV-T) Rating: BUY Target Price: C$1.15 Target Price Metric: 1.0x After-Tax Corporate NAV10%

1/7/14

Market Capitalization, US$M Current Cash, US$M Working Capital, US$M Long-term Debt, US$M Enterprise Value (EV), US$M

Current Price, C$ $0.96 Return, % 20% 52-Week High / Low, C$ $1.19 / $0.49 Shares O/S, million 279.3 Shares F/D, million 293.7

$255.4 $50.1 $11.5 ($32.6) $276.4

Fully Financed After-Tax Corporate NAV Sensitivity (C$ per fully financed F/D share)

Lead Price (US$/lb)

Base Case: $1.1 $1.10 $0.35 $0.60 $0.85 $1.10 $1.35 $1.60 $1.85 $2.10 $2.35 $2.60

$0.35 ($3.41) ($3.01) ($2.62) ($2.24) ($1.87) ($1.50) ($1.13) ($0.77) ($0.41) ($0.07)

$0.60 ($2.15) ($1.78) ($1.41) ($1.04) ($0.68) ($0.32) $0.02 $0.33 $0.58 $0.82

$0.85 ($0.97) ($0.61) ($0.25) $0.09 $0.38 $0.63 $0.86 $1.08 $1.30 $1.52

$1.10 $0.13 $0.42 $0.67 $0.90 $1.12 $1.34 $1.56 $1.77 $1.99 $2.20

Zinc Price (US$/lb) $1.35 $1.60 $0.93 $1.63 $1.16 $1.85 $1.38 $2.07 $1.60 $2.28 $1.81 $2.49 $2.03 $2.70 $2.24 $2.92 $2.45 $3.13 $2.67 $3.34 $2.88 $3.55

$1.85 $2.32 $2.53 $2.74 $2.95 $3.17 $3.38 $3.59 $3.80 $4.01 $4.22

$2.10 $2.99 $3.20 $3.41 $3.62 $3.84 $4.05 $4.26 $4.47 $4.68 $4.89

$2.35 $3.66 $3.88 $4.09 $4.29 $4.50 $4.71 $4.92 $5.13 $5.34 $5.55

$2.60 $4.33 $4.54 $4.75 $4.96 $5.18 $5.38 $5.60 $5.79 $6.00 $6.21

$2.35 $2.14 $2.29 $2.44 $2.59 $2.74 $2.89 $3.04 $3.19 $3.34 $3.49

$2.60 $2.60 $2.75 $2.90 $3.05 $3.20 $3.35 $3.50 $3.65 $3.80 $3.95

Bathurst After-Tax Project NAV Sensitivity (C$ per fully financed F/D share)

Lead Price (US$/lb)

Base Case: $0.45 $0.45 $0.35 $0.60 $0.85 $1.10 $1.35 $1.60 $1.85 $2.10 $2.35 $2.60

$0.35 ($2.59) ($2.33) ($2.08) ($1.82) ($1.57) ($1.31) ($1.06) ($0.80) ($0.55) ($0.29)

$0.60 ($1.81) ($1.55) ($1.30) ($1.04) ($0.79) ($0.53) ($0.28) ($0.05) $0.12 $0.28

$0.85 ($1.03) ($0.77) ($0.52) ($0.26) ($0.04) $0.13 $0.29 $0.44 $0.59 $0.74

$1.10 ($0.25) ($0.04) $0.14 $0.30 $0.45 $0.60 $0.75 $0.90 $1.05 $1.20

Zinc Price (US$/lb) $1.35 $1.60 $0.31 $0.77 $0.46 $0.92 $0.61 $1.07 $0.76 $1.22 $0.91 $1.37 $1.06 $1.52 $1.21 $1.67 $1.36 $1.82 $1.51 $1.97 $1.66 $2.12

$1.85 $1.23 $1.38 $1.53 $1.68 $1.83 $1.98 $2.13 $2.28 $2.42 $2.57

$2.10 $1.69 $1.84 $1.99 $2.14 $2.28 $2.43 $2.58 $2.73 $2.88 $3.03

Santander After-Tax Project NAV Sensitivity (C$ per fully financed F/D share)

Lead Price (US$/lb)

Base Case: $0.53 $ 0.53 $0.35 $0.60 $0.85 $1.10 $1.35 $1.60 $1.85 $2.10 $2.35 $2.60

$0.35 ($0.94) ($0.80) ($0.66) ($0.54) ($0.42) ($0.30) ($0.19) ($0.08) $0.02 $0.10

$0.60 ($0.46) ($0.34) ($0.23) ($0.12) ($0.01) $0.09 $0.18 $0.26 $0.34 $0.41

$0.85 ($0.06) $0.04 $0.15 $0.23 $0.31 $0.38 $0.45 $0.52 $0.59 $0.66

$1.10 $0.26 $0.34 $0.41 $0.48 $0.55 $0.62 $0.69 $0.75 $0.82 $0.88

Zinc Price (US$/lb) $1.35 $1.60 $0.51 $0.74 $0.58 $0.81 $0.65 $0.88 $0.72 $0.94 $0.78 $1.00 $0.85 $1.06 $0.91 $1.13 $0.97 $1.19 $1.04 $1.25 $1.10 $1.32

$1.85 $0.97 $1.03 $1.09 $1.15 $1.22 $1.28 $1.34 $1.41 $1.47 $1.53

$2.10 $1.18 $1.24 $1.31 $1.37 $1.43 $1.50 $1.56 $1.62 $1.68 $1.74

$2.35 $1.40 $1.46 $1.53 $1.58 $1.64 $1.70 $1.76 $1.82 $1.89 $1.95

$2.60 $1.61 $1.67 $1.73 $1.79 $1.86 $1.91 $1.98 $2.03 $2.09 $2.14

$1.85 $0.05 $0.07 $0.08 $0.10 $0.11 $0.13 $0.14 $0.16 $0.17 $0.19

$2.10 $0.08 $0.10 $0.11 $0.13 $0.14 $0.16 $0.18 $0.19 $0.20 $0.21

$2.35 $0.12 $0.13 $0.15 $0.16 $0.18 $0.19 $0.20 $0.21 $0.22 $0.23

$2.60 $0.15 $0.17 $0.18 $0.19 $0.21 $0.22 $0.23 $0.24 $0.25 $0.26

2014E CFPS Sensitivity (US$)

Lead Price (US$/lb)

Base Case:- $0.03 $ (0.03) $0.35 $0.60 $0.85 $1.10 $1.35 $1.60 $1.85 $2.10 $2.35 $2.60

$0.35 ($0.19) ($0.17) ($0.15) ($0.13) ($0.11) ($0.09) ($0.07) ($0.05) ($0.04) ($0.02)

$0.60 ($0.14) ($0.12) ($0.10) ($0.09) ($0.07) ($0.05) ($0.03) ($0.02) ($0.00) $0.02

$0.85 ($0.10) ($0.08) ($0.06) ($0.05) ($0.03) ($0.01) $0.00 $0.02 $0.04 $0.05

$1.10 ($0.06) ($0.04) ($0.03) ($0.01) $0.01 $0.02 $0.04 $0.05 $0.07 $0.09

Zinc Price (US$/lb) $1.35 $1.60 ($0.02) $0.01 ($0.01) $0.03 $0.01 $0.05 $0.03 $0.06 $0.04 $0.08 $0.06 $0.09 $0.07 $0.11 $0.09 $0.12 $0.10 $0.14 $0.12 $0.15

Haywood model is based on a forecast zinc price of US$1.00/lb in 2014, US$1.20/lb in 2015-2016, and US$1.15/lb thereafter. Haywood model is based on a forecast lead price of US$1.00/lb in 2014, US$1.20/lb in 2015-2016, and US$1.15/lb thereafter. NAV sensitivity is based on 319M fully financed F/D shares. 2014E CFPS sensitivity is based on 284M fully financed O/S shares.

Source: Haywood Securities


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Important Information and Legal Disclaimers This report is neither a solicitation for the purchase of securities nor an offer of securities. Our ratings are intended only for clients of Haywood Securities Inc., and those of its wholly owned subsidiary, Haywood Securities (USA) Inc. and such clients are cautioned to consult the respective firm prior to purchasing or selling any security recommended or views contained in this report. Estimates and projections contained herein, whether or not our own, are based on assumptions that we believe to be reasonable. The information presented, while obtained from sources we believe reliable, is checked but not guaranteed against errors or omissions. Changes in the rates of exchange between currencies may cause the value of your investment to fluctuate. Past performance should not be seen as an indication of future performance. The investments to which this report relates can fluctuate in value and accordingly you are not certain to make a profit on any investment: you could make a loss. Haywood Securities, or certain of its affiliated companies, may from time to time receive a portion of commissions or other fees derived from the trading or financings conducted by other affiliated companies in the covered security. Haywood analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income. Haywood Securities, Inc., and Haywood Securities (USA) Inc. do have officers in common however, none of those common officers affect or control the ratings given a specific issuer or which issuer will be the subject of Research coverage. In addition, the firm does maintain and enforce written policies and procedures reasonably designed to prevent influence on the activities of affiliated analysts.

Dissemination of Research Research reports are disseminated either through electronic medium or in printed copy. Clients may access reports on our website, or receive publications directly via email. Haywood strives to ensure all clients receive research in a timely manner and at the same time. It is against our policy for analysts to discuss or circulate their recommendations internally prior to public distribution. This policy applies equally to recommendation changes, target changes and/or forecast revisions. For Canadian residents: Haywood Securities Inc. is a Canadian registered broker-dealer and a member of the Investment Industry Regulatory Organization of Canada, the Toronto Stock Exchange, the Toronto Venture Exchange and the Canadian Investor Protection Fund and accepts responsibility for the dissemination of this report. Any Canadian client that wishes further information on any securities discussed in this report should contact a qualified salesperson of Haywood Securities Inc. For U.S. residents: This investment research is distributed in the United States, as third party research by Haywood Securities (USA) Inc. Haywood Securities (USA) Inc. is a wholly owned subsidiary of Haywood Securities Inc., registered with the U.S. Securities and Exchange Commission, and is a member of FINRA and the Securities Investor Protection Corporation (SIPC). Haywood Securities (USA) Inc. as a U.S. registered broker-dealer accepts responsibility for this Research Report and its dissemination in the United States. Any U.S. client that wishes further information on any securities discussed in this report or wish to effect a transaction in these securities should contact a qualified salesperson of Haywood Securities (USA) Inc. Haywood Securities Inc. Research Analysts are considered Foreign Research Analysts to the USA and are not registered/qualified as Research Analysts with FINRA. As these analysts are considered Foreign Research Analysts they may not be specifically subject to FINRA (formerly NASD) Rule 2711 and FINRA (formerly NYSE) Rule 472 restrictions on communications with a Subject Company, Public Appearances and trading securities held by a Research Analyst Account. This report may be distributed in the following states: nil. Otherwise, this report may only be distributed into those states with an institutional buyer state securities registration exemption.

Analyst Certification I, Stefan Ioannou, 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.


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Important Disclosures Of the companies included in the report the following Important Disclosures apply: Ticker Company 1 2 3 4 5 6 7 8 TSX:CS Capstone Mining Corp. X TSXV:CRI Castle Resources Inc. X X X X TSX:CUM Copper Mountain Mining Corp. X TSX:COP Coro Mining Inc. X X TSX:FM First Quantum Minerals Ltd. X X TSXV:FOM Foran Mining Corp. X TSX:LUN Lundin Mining Corporation X TSX:NSU Nevsun Resources Ltd. X TSX:RNX Royal Nickel Corporation X TSXV:SGC Sunridge Gold Corp. X X TSX:TV Trevali Mining Corp. X X TSX:ZAZ Zazu Metals Corp. X X The Analyst(s) preparing this report (or a member of the Analysts’ households) have a financial interest 1 in this company. As of the end of the month immediately preceding this publication either Haywood Securities, Inc., one 2 of its subsidiaries, its officers or directors beneficially owned 1% or more of this company. Haywood Securities, Inc. has reviewed lead projects of this company and a portion of the expenses for 3 this travel have been reimbursed by the issuer. Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling 4 group in a public offering of securities for this company in the past 12 months. Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking 5 services from this company in the past 12 months Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking 6 services from this company in the past 24 months 7 Haywood Securities, Inc. or one of its subsidiaries is restricted on this company at the time of publication Haywood Securities, Inc. or one of its subsidiaries expects to receive or intends to seek compensation for 8 investment banking services from this company in the next three months Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance:  Haywood Securities Inc. pro group holdings exceed 10% of the issued and outstanding shares of Zazu Metals Corp. (ZAZ-T).

Rating Structure Each company within an analyst’s universe, or group of companies covered, is assigned: (i) a recommendation or rating, usually BUY, HOLD, or SELL; (ii) a 12 month target price, which represents an analyst’s current assessment of a company’s potential stock price over the next year; (iii) an overall risk rating which represents an analyst’s assessment of the company’s overall investment risk; and (iv) specific risk ratings or risk profile parameters which in their aggregate support an analyst’s overall risk rating. These ratings are more fully explained below. Before acting on our recommendation we caution you to confer with your Haywood investment advisor to determine the suitability of our recommendation for your specific investment objectives, risk tolerance and investment time horizon.

Recommendation Rating BUY –The analyst believes that the security will outperform other companies in their sector on a risk adjusted basis or for the reasons stated in the research report the analyst believes that the security is deserving of a (continued) BUY rating.


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HOLD – The analyst believes that the security is expected to perform in line with other companies in their sector on a risk adjusted basis or for the reasons stated in the research report the analyst believes that the security is deserving of a (continued) HOLD rating. SELL – Investors are advised to sell the security or hold alternative securities within the sector. Stocks in is expected to underperform other companies on a risk adjusted basis or for the reasons stated in the research report the analyst believes that the security is deserving of a (continued) SELL rating. TENDER – The analyst is recommending that investors tender to a specific offering for the company’s stock. RESEARCH COMMENT – An analyst comment about an issuer event that does not include a rating or recommendation. UNDER REVIEW – Placing a stock Under Review does not revise the current rating or recommendation of the analyst. A stock will be placed Under Review when the relevant company has a significant material event with further information pending or to be announced. An analyst will place a stock Under Review while he/she awaits sufficient information to re-evaluate the company’s financial situation. COVERAGE DROPPED – Haywood Securities will no longer cover the issuer. Haywood will provide notice to clients whenever coverage of an issuer is discontinued. Haywood’s focus is to search for undervalued companies which analysts believe may achieve attractive risk-adjusted returns. This research coverage on potentially undervalued companies may result in an outweighed percentage of companies rated as BUY. Management regularly reviews rating and targets in all sectors to ensure fairness and accuracy. For further information on Haywood Securities’ research dissemination policies, please visit: http://www.haywood.com/research_dissemination.asp

Overall Risk Rating Very High Risk: Venture type companies or more established micro, small, mid or large cap companies whose risk profile parameters and/or lack of liquidity warrant such a designation. These companies are only appropriate for investors who have a very high tolerance for risk and volatility and who are capable of incurring temporary or permanent loss of a very significant portion of their investment capital. High Risk: Typically micro or small cap companies which have an above average investment risk relative to more established or mid to large cap companies. These companies will generally not form part of the broad senior stock market indices and often will have less liquidity than more established mid and large cap companies. These companies are only appropriate for investors who have a high tolerance for risk and volatility and who are capable of incurring a temporary or permanent loss of a significant loss of their investment capital. Medium-High Risk: Typically mid to large cap companies that have a medium to high investment risk. These companies will often form part of the broader senior stock market indices or sector specific indices. These companies are only appropriate for investors who have a medium to high tolerance for risk and volatility and who are prepared to accept general stock market risk including the risk of a temporary or permanent loss of some of their investment capital Moderate Risk: Large to very large cap companies with established earnings who have a track record of lower volatility when compared against the broad senior stock market indices. These companies are only appropriate for investors who have a medium tolerance for risk and volatility and who are prepared to accept general stock market risk including the risk of a temporary or permanent loss of some of their investment capital.

Risk Profile Parameters – Mining and Minerals Sector Forecast Risk: High (7-10) – The Company’s primary project(s) is at an earlier stage of exploration and/or resource delineation whereby grades, tonnages, capital and operating costs, and other economic/operational parameters are not yet reliably established. Moderate (4-6) – The Company has taken steps to de-risk its primary producing, or soon to be producing project(s) and has established reasonably reliable operational and economic parameters. Low (1-3) – The Company has derisked the majority of its primary project(s) through operational history and established production profile(s). Financial Risk: High (7-10) – The Company’s near- and medium-term (capital) expenditure considerations, including the current year or next forecast year, are not fully funded through a combination of established debt facilities, cash on hand, and/or anticipated cash flow from existing operations—successful project execution depends, in part, on future (equity) financing(s). Existing and/or forecast levels of leverage are above average relative to the Company’s peer group. The risk of a significant capital cost overrun(s) is high given the early stage of project development. Moderate (4-6) – The Company’s nearStefan Ioannou, PhD416-507-2309[email protected]

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term (capital) expenditure program, in the current year or next forecast year, is fully funded through a combination of established debt facilities, cash on hand, and/or anticipated cash flow from existing operations. Medium-term funding requirements will likely require additional financing consideration, but should be achievable assuming no significant uncontrollable events impede access to capital. Existing and/or forecast levels of leverage are in-line with the Company’s peer group. The risk of a significant capital cost overrun(s) is moderate given the advanced stage of project development. Low (1-3) – the Company’s near- and medium-term (capital) expenditure program is fully funded through a combination of established debt facilities, cash on hand, and/or anticipated cash flow from existing operations. Existing and/or forecast levels of leverage are below average relative to the Company’s peer group. Valuation Risk: High (7-10) – The current valuation is at a premium to peers. The valuation reflects considerable future exploration success and/or commodity appreciation. Where applicable, the current capitalization exceeds the “DCF” evaluation by more than 50%. Moderate (4-6) – The current valuation is within historic ranges and generally consistent with peers. The valuation reflects reasonable exploration success and/or commodity appreciation. Where applicable, the current capitalization exceeds the DCF valuation by 15% to 50%. Low (1-3) – The current valuation is at the low end of historic ranges and at a discount to peer valuations. The valuation reflects limited new exploration success and no commodity appreciation. Where applicable, the current capitalization exceeds the DCF valuation by less than 15% or falls below the current market value. Political Risk: High (7-10) –Obtaining permits is challenging. Properties are located in an area(s) with high geo-political uncertainty, limited access, and/or have significant new infrastructure requirements. Moderate (4-6) – Properties are located in an area(s) with moderate geo-political risk, reasonable or manageable access, and some established infrastructure. Low (13) – Properties are located in areas with a manageable geo-political risk profile and established access/infrastructure.

Distribution of Ratings (as of January 7, 2014) Distribution of Ratings % # Buy 36.9% 55 Hold 10.7% 16 Sell 1.3% 2 Tender 0.7% 1 UR (Buy) 20.8% 31 UR (Hold) 2.0% 3 UR (Sell) 0.7% 1 dropped (TTM) 26.8% 40

IB Clients (TTM) 40.0% 4.0% 0.0% 0.0% 16.0% 8.0% 0.0% 32.0%

Price Chart, Rating and Target Price History (as of January 7, 2014)

B: Buy; H: Hold; S: Sell; T: Tender; UR: Under Review Source: Capital IQ and Haywood Securities


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