Maison
Placements
Canada
January 16, 2013
Gold: $10,000 Gold
“A government cannot become insolvent with respect to obligations in its own currency. A fiat
money system, like the one we have today, can produce claims without limit”. Alan
Greenspan, 1997
So it goes. We can always print to pay for our obligations, so goeth the Bernanke gospel, Mr.
Greenspan’s successor. Yet, notwithstanding the Fed pressing the monetary accelerator to the
floor, the economy is still not growing. Monetary policy has failed to engineer a strong
recovery. Worse for the past four years, the White House and Congress have been locked in a
political fight proving them incapable at handling economic problems. Round one, Obamacare,
States are opting out. And, each time there is another round of brinkmanship. Round two, Dodd
Frank, watered down. Round three, Fiscal cliff, averted. America just trades one cliff for
another. Round four, the government’s debt ceiling must be raised coinciding with the March
deadline (is this round five?) over the sequestered spending cuts. If no deal, then a paltry $110
1
billion of annual spending cuts kicks in, a drop in the bucket. Brinksmanship is repeated over
and over.
Still, America’s structural problems persist. America’s debt crisis increases with each and
every round of quick fixes with the public finances supported by ever more doses of money
creation. In the ultimate Ponzi scheme, newly minted dollars pay out past obligations. And
contrary to widespread belief, investors appear to be growing accustomed to Washington’s
brinkmanship, assuming they can kick the can down the road, one more time. As long as the
Fed kept the money spigots open, all was fine. But if the money printing stopped, everything
would collapse. And now more and more foreign money is losing confidence and patience in
America’s ability to meet their escalating obligations. America wants that free lunch, just who
will pay the bills?
The United States has Become Very European
The big fear of the fiscal cliff was the belief it would usher in a period of austerity like the
European experience. Indeed the US debacle looks very familiar. The US has become very
European. The fiscal cliff however was just recognition of the need to get America’s finances
under control and at long last tackle their crushing debt burden. The New Year’s deal did
nothing. No one likes taking bitter medicine but needed in the United States was a dose of what
Europe is experiencing, austerity accompanied by tax hikes. The fiscal cliff was just that, a
reality check and a symptom not a cause.
In Europe, amid the optimism that the worst is behind them and after one year of umpteen
summits, its 27 members are still negotiating a budget which would cover the roughly $1
trillion in spending from 2014 to 2020. But, the gap was so wide that the only consensus was
to delay. Thus the European Central Bank was left with the only policy option in its arsenal,
flooding the system with cheap money. By buying unlimited short term government bonds
from those needy countries, the bank is kicking the can down the road again. Greece is still in
2
Euroland but Europe’s outlook remains grim. Debt creeps higher and economies remain in
decline as currencies spiral down in a currency war.
Mr. Obama’s victory was built on a shrewd strategy created ironically by Republican strategist
Karl Rove who divided constituencies to get Bush elected. This time, both parties depended on
the outsized influence of narrow interest groups. Mr. Obama appealed to a coalition of African
Americans, Hispanic Americans, younger Americans and of course a liberal dose of gender
based policies worked to get Obama elected. The Republicans were helped by the Tea Party
and superpacs. The last election was based on minutiae issues, or “small ball” politics for fear
of scaring off the populace with the big stuff such as the meltdown in Europe, or even austerity
vs. growth. But in this game of constituency-based politics, it is difficult to build a major
consensus to tackle America’s problems among the broader-based populace. At a time when
the population should be prepared to make the big choices, bipartisanship guarantees gridlock.
The laws of economics state that bigger government must be financed either in higher taxes or
bigger deficits. None of this however was decided when $5 billion was spent on an election
that perpetuated the status quo. Meanwhile, spending has soared as a percentage of GDP to its
highest levels other than the World Wars. And looming is the threat of another US credit rating
downgrade while the debt ceiling negotiations to raise the $16.4 trillion borrowing limit begins.
The debt ceiling has been raised forty times in thirty years. Déjà vu.
Debt Forever
America has far too much debt at 100 percent of Gross Domestic Product. That debt draws
down prosperity from the future. America faces a gigantic black hole between federal spending
and revenues with deficits exceeding $1 trillion for four years in a row. This year despite
Washington’s machinations, the deficit will be the highest than in any year since 1946. But
how to bring the trillion dollar deficits and
$16.4 trillion public debt under control?
As usual politics ahead of economics. In
the United States, like Europe, the
government’s insatiable appetite for
revenues was an opportunity to both raise
revenues and for a bit of social engineering
by taxing the rich in an effort to close the
wealth gap. For the first time in two
decades, Congress actually raised taxes.
Despite the rhetoric, a sliver of taxpayers
cannot pay for everything. The experience
of other countries suggests that isn’t
enough. Despite revenue hikes in the New
Year’s deal, cuts to spending were put off
to later. The most urgent priority then is to
reduce the scale of spending. Easier said
than done. In the New Year’s deal, the deficit would only shrink by $60 billion or 0.06 percent.
3
American has an unsustainable debt problem because they have a spending problem. Not
included are the big three unfunded entitlement programs such as Social Security, Medicare
and Medicaid whose billowing costs have been bloated by bureaucracies, litigation and
extraordinary expensive healthcare. America should start with the President’s own bipartisan
Bowles-Simpson Commission that called for reduced spending through entitlement reform as
well as broaden the tax base. With revenues of $2.4 trillion, America has little wiggle room.
Federal spending has traditionally been about 19 percent of GDP but has surged to 24 percent.
Or reform the tax code where there is something like $1.2 trillion of tax breaks equivalent to
almost half of what America gathers in taxes, which begs the question of eliminating some
exemptions instead of trying to squeeze money from the one percent. Mortgage deductibility
was an election sop of yesteryears ago and bigger houses are not the solution but billions are
lost in deductions. Unfortunately tax reform is politically divisive but if doesn’t have to be, as
Canada in the mid-90s showed that debt can be retired with tough policies.
Central Banks Have Become the Handmaidens of Government
To pay for those deficits, central banks once independent have become the handmaidens of
governments, engaging in untested measures such as quantitative easing, causing balance
sheets to balloon. Central banks also replaced strict inflation targeting with employment targets
which is actually code for inflating debt away. Bernanke pledges $1 trillion a year or a third of
the Fed’s assets to buy as much as $85 billion of debt a month until America’s job rate drops.
“Helicopter Ben” still believes that America’s problems can be solved by printing dollars. To
infinity and beyond.
We believe this experimentation has done
structural damage to the world’s largest
economy fueling a giant credit bubble. Aiding
and abetting are the big investment banks who
stepped in following the Lehman Brothers
collapse but never left. Quantitative easing is
more than interest rate manipulation. The
mechanics saw the creation of new forms of
money proxies as part of the shadow banking
system that has grown to $67 trillion. In fact
these derivatives are not anchored to anything
concrete or physical. The shadow banking
assets are sliced and diced and resold over and
over. No underlying value here. It was that
way in 2008 which almost broke the system
and today despite Dodd Frank, the Volcker
Rule and Basel III, it is the same. The volume
of derivatives has swamped the world’s
domestic product by twenty times or $1.200 trillion ($1.2 quadrillion). Bigger and better?
4
As a result, the total assets of the Federal Reserve has exploded from $869 billion in 2008 to
over $3 trillion. Of concern, are the fiscal consequences since the bank resorted to the printing
press to pay for those so-called assets. In the minutes of the December Fed meeting, certain
members expressed concern at the open-ended nature of the central bank’s quantitative easing.
Foreigners own more than a third of US debt in a pyramid arrangement where the Fed prints
money out of thin air to purchase debt. Foreign purchases of US debt has slowed down
leaving the Fed to buy 77 percent of all Treasuries issued last year. Of concern is the Fed’s
massive expansion of its balance sheet makes an exit strategy virtually impossible, since their
balance sheet has grown bigger than the entire market. A great many economists are comforted
in that the liquidity sits in the Treasury or some bank’s vault. Yet history shows that money can
easily leave and quickly (called velocity), leaving the Fed to close the vault door after the
money has gone. Given central banks’ dismal record, gold is a haven in the event the vault door
was not closed fast enough. The real danger is just ahead. Round six?
China’s Fifth Generation
At a time when the US and China chose their new leaders, it is remarkable that the two
opposite countries should have in common the disparities of wealth among their population. It
appears that there never has been a wider gulf between the haves and have-nots, or the 1
percent versus the 99 percent. Both countries approached their problem differently. Rather than
tax and spend, China has grown at warp speed, due in part to the migration of workers into the
cities. Growth is the key. Urbanization has been good for China and it is estimated that over
half of the population lives in the cities and towns, much less than average developed
economies where 80 percent live in the cities. All of which means that China’s new leaders’
task is to continue the movement of the population into the towns and cities. Urbanization will
mean the need for new buildings, infrastructure and construction, which are good for the
consumption of resources and extension of the commodity supercycle.
There was much attention on the election of the fifth generation party leaders in China. To be
sure, freshly installed Xi Jinping will embark on a brand new five year plan. The new
leadership must not only govern more than 1.3 billion people but also cope with
demonstrations and riots that number about 500 a day. China is evolving with their companies
once branches of respective ministries to commercial entities, all in less than 20 years. We
expect the first few years to be cautious while Mr. Xi and his colleagues consolidate their
leadership. Importantly though, five leaders of the seven member politburo retire at the end of
five years, so Messers Xi and Li will be able to appoint individuals much more closely aligned
with them. While much attention is spent on the fight against corruption, we believe that the
economy will be “Job One”.
Cheap Money
Every central banker has become pro-growth, repeating the same mantra, more money. Money
has never been so cheap and so easy. The price of credit is too low, forcing investors to take
bigger risks in the quest for yield. Interest rates are near zero and real rates remain negative
with no signs of inflation. However, those central bankers were not around in the seventies,
which was the last time monetary policy was so liberal that inflation eventually took off to
5
hyperinflation levels. We are told it is different this time. So far the liquidity that the central
bankers have unleashed has spilled into hard assets such as oil, gold, and financial assets just
like the seventies. Ironically with the Fed’s new emphasis on growth instead of inflation, there
is evidence of creeping inflation everywhere. Subway fares will go up yet again as well as
property taxes. Postage rates up, haircuts up, taxes up, as are energy prices. Rising prices are
symptoms of inflation. For the early part of the seventies, prices were illusory and it took a
while for the prices of goods and services to go up. Cheap money has encouraged leverage with
another bond market bubble ready to burst.
The Fed has backed itself into a corner. America has attempted to inflate its way out of the debt
problem since that debt is denominated in its own currency. We believe the rise in debt will be
a burden for decades. The near collapse of the financial system in 2008 caused the
recapitalization of the financial system and the burden of servicing that debt shifted from the
private sector to the public sector. This is our problem. In this new age of austerity, with a
monetary system based on the dollar, the world has tied themselves to a high cost and highly
indebted country that still believes they can always print more dollars or recently, issue a one
trillion dollar platinum coin to pay for their debts. The Fed has tripled the monetary base.
Currency circulation has also increased, due largely to the monetization of the US fiscal
deficits and increases in commercial bank reserves have been converted into faster money
growth.
We believe the Fed’s policy of directly monetizing newly created debt to service their debt will
prove inflationary. Once a pickup in growth, either in China or elsewhere, that excess liquidity
will find its way into an inflationary explosion of demand for labour, goods and services. Like
the seventies, the Fed won’t be able to reduce the excessive stock of money it has created.
Were rates suddenly to rise because the Chinese demanded more, the value of the Fed’s $3
trillion portfolio would collapse since most of its assets are of long term duration. In fact a
paltry one percentage increase could wipe out the Fed’s entire capital base. Ironically, the
Fed’s near zero interest rate policy aimed at stimulating housing, ignores demographics. As
baby boomers become empty nesters, they downsize and most retire. The demand for bigger
houses is not there so slashing interest rates penalizes the same group, punishing the retiring
savers and rewarding the spendthrifts. Margin debt in November is at $326 million, higher than
the pre-collapse levels reached in 2008. There is simply too much money chasing too few
goods, and that is inflationary. The Fed is part of the problem.
Back To The Future
What ballasts the modern day monetary system is debt. America owes more than it owns and
consumes more than it produces. This is not a deflationary environment but an inflationary one.
Gold is thus a good thing to have. And rather than mint a trillion dollar platinum coin to pay
the bills, we believe they should issue gold coins and revert to a gold standard which has
worked for hundreds of years.
Gold was up last year for the 12th consecutive year, the longest in at least nine decades. Gold
rose 7 percent last year, spurred by ETFs as well as central bank buying. Gold has rallied from
$250 an ounce, moving almost eight times to a high at $1,920 in 2011, but still shy of the
6
inflation adjusted price of $2,500 an ounce. However gold lately has not been as precious,
frustrating both bulls and bears despite fears about the US economy, political gridlock and
more quantitative easing. In the past these influences would act a catalyst for stronger prices.
Central banks are the largest official holder of gold with some 31,000 tonnes of gold in their
vaults. In fact they have been big buyers with more than fifteen banks on the buy side in an
effort to diversify their reserves in response to growing concerns about a weaker US greenback.
Under Basel III, gold was rerated from a Tier 3 asset to Tier I, allowing banks to buy or hold
gold instead of sovereign bonds. Central bankers will continue to be big buyers of gold.
However, ETFs or the people’s central bank established in 2003 bought some 2,632 tonnes
holding slightly less than IMF with 2,814 tonnes.
Although nearly 40 percent of the world’s supply is recycled, the only source of new supplies
are the gold miners which lost nearly 25 percent since late 2011. Miners’ cash costs are
concerns as mega-billion projects bring mega problems. But the industry has got religion. Most
will emphasize profits over growth. Dividend hikes are likely and M&A actually will see the
cast-offs of higher cost mines and/or emphasis on less riskier geopolitical areas. Growth has
given way to profits. Moreover, we expect emerging signs of a shortage of physical gold as
gold miners’ production peaked. To supply this demand the gold mines produced only 2,700
tonnes of gold annually. The only other source of gold is the estimated 22,000 tonnes in-situ
reserves held by the gold miners in the ground but that must be extracted at a cost of $1,000 an
ounce. We believe the in situ reserves will be more highly valued causing a reversal of the
equity downtrend. Gold shares’ bull market has just begun.
Gold Stocks Have Never Been As Cheap
Chinese gold demand fell in the third quarter due in part to the lull before the leadership
change. We expect a resumption in demand that will see China consume more gold than any
other nation beginning in the current quarter. China alone has 1,084 tonnes however that
represents less than 2 percent of their reserves. If China were to increase their holdings to 10
percent, that could represent at least three years of the world’s output. Still, China is the fifth
largest holder behind, the largest the United States, at 8,133 tonnes held at Fort Knox.
It doesn’t matter then, who owns gold, whether a central bank, ETF or my wife. Gold has the
same value whoever owns it. Gold has been range bound. In the short term, gold needs to
break through $1,700 an ounce. Gold is a hedge against the consequences that the world’s
central banks will eventually ignite inflation. This fear also explains why the idea of a return to
a gold standard has appeal, particularly when every major currency has fallen against gold.
Gold has simply become the world’s new global currency. Gold is a hedge against debasement
of currencies as well as an asset of last resort among central banks and investors. As such we
have raised our new target to $10,000 an ounce. While $10,000 may seem outrageous, gold
rose nearly 2,500 percent from 1971 to 1980 but is only up 550 percent from the lows of
twelve years ago. There is a lot left in this bull market.
7
Recommendations
Agnico-Eagle Ltd.
Agnico-Eagle is Canada’s largest gold producer and recently raised its production guidance to
650,000 ounces due to the turnaround at Meadowbank in Nunavut. Agnico operates mines in
Canada, Finland and Mexico and has restored its premium position to its peers due to
favourable geographic risk, low operating costs and a dramatic turnaround in operations.
Agnico is Canada’s fifth biggest gold player and the turnaround was due to better execution of
its mine plans. We like Agnico here for the growth in production and reserve potential.
Barrick Gold Corp.
Barrick is losing its lustre. Barrick reported a disappointing third quarter amid investor concern
that the Pascua Lama gold project on the Chile/Argentine border will turn out to be the world’s
most expensive gold mine with a price tag in excess of $8.5 billion. Pascua Lama is again
delayed. Meantime, Barrick has lowered its guidance, due in part to disappointing output from
African Barrick which was to be sold to China National Gold Group. However that deal
collapsed over a difference in valuation. Meantime, Barrick announced a quarterly dividend of
$0.20 per share which was also disappointing given its pledge to do something about
shareholder value. Barrick’s problems are that its mega-projects are taking longer to bring on
stream and an increasingly large proportion of its mines reside in geopolitical riskier areas.
Increasing costs also hurt its former robust cash flow margins. Project delays and shrinking
projects are not a good combination and Barrick’s finances are tight with $14 billion of debt.
We believe Barrick should retrench, spinoff assets and get back to its core business of making
money from gold mining.
Excellon Resources Inc.
We visited Excellon’s 100 percent owned La Platosa mine last month in Durango, Mexico.
Excellon’s La Platosa mine lies in the heart of the carbonate replacement deposit (CRD) belt
that is the source of Mexico’s major silver production. Excellon is Mexico’s highest grade
silver mine and the mine is up and running after a 13 week stoppage due to an illegal dispute
among its miners. The dispute is now resolved and both levels of government have been
supportive of Excellon’s efforts. Production restarted and is budgeted at 100,000 ounces a
month at a low cost of $5.30 per ounce. Most exciting, Excellon has drilled about a dozen holes
on Rincon del Caida leading to a discovery believed to be close to the “source” of the La
Platosa mantos. Excellon plans to “follow-up” these results with five drills turning. At Miguel
Auza, the 350 tpd mill is underutilized and Excellon will review local results to better utilize
facilities. We expect Excellon to produce 1.5 million ounces this year with excess cash flow to
fund an ambitious exploration program and a consolidation in Mexico and Timmins where
Excellon has developed a second leg with the acquisition of Timmins based Lateegra. Finally,
we note the discovery of rare earth values at Canon Colorado, so Excellon may have a third
leg. Excellon has $11 million of cash, an experienced Board and promising exploration upside
makes this junior a top pick this year.
8
IAMGold Corporation
IAMGold took a hit in the third quarter due to a drop in gold production to 188,000 ounces
from 205,000 ounces of production a year earlier. As such IAMGold lowered their guidance to
840,000 ounces with an increase in cash costs. In addition, teething problems at Essakane as
well as Rosebel in Suriname hurt production guidance. Essakane was supposed to be the crown
jewel but lower grades hurt output. IAMGold has continued with the plant expansion which
will not be completed until next year. IAMGold also bet $600 million on Côté Lake in
Northern Ontario and the company is drilling off that deposit. At the earliest. Côté Lake won’t
be in production until 2017. However, we believe continuity will be a problem and that Côté
Lake will be difficult and prove expensive to bring into production. Sell.
Kinross Gold
Kinross reported a better third quarter with slightly improved production of 672,000 ounces
and higher cash costs of $677 an ounce due to gains at Fort Knox and the Kupol mine in
Russia. However, problem plagued Tasiast mine in Mauritania was affected by inconsistent
grade quality and the company is working on another revised mine plan. Surprisingly, lower
output at the Paracatu in Brazil was due to a drop in recoveries despite the commissioning of
Paracutu’s fourth ball mill. Turning to Tasiast, it is surprising that the company has scrapped
the sulphide heap leach option, citing metallurgical problems since that work should have been
done earlier. Nonetheless, we believe that the problems will continue. Despite newly minted
Paul Rollinson’s cost control measures, we still believe it is too early to purchase Kinross.
Kinross expects to produce 2.5 million ounces this year. We prefer Eldorado at this time.
St. Andrew Goldfields
St. Andrew Goldfields had a record fourth quarter and produced almost 96,000 ounces in 2012.
Cash costs came in under $800 an ounce from its three producing mines in Timmins Ontario.
The boost in gold production came from the Holt mine which produced 15,000 ounces. St.
Andrew is bringing Taylor, its fourth mine, into production and the company pulled a 15,000
tonne bulk sample which would be processed during the first quarter. St. Andrew has a much
improved balance sheet with $30 million of cash and a $10 million line of credit. Even after a
healthy royalty, St. Andrew recorded positive cash flow in the quarter which was better than
most of its peers. President Jacques Perron is the key here and St Andrew has four rigs turning.
We continue to like the company here believing the shares are the best vehicle to play in the
Timmins gold camp.
John R. Ing
416-947-6040
9
16/01/2013
MAISON PLACEMENTS CANADA INC.
Price
Symbol 15-Jan
52 Week Range
Market
Market
Stock
Cap $Mil
Cap/oz
Rank
2012E
2013E
2012E
2013E
275
500
0.54
1.00
1.50
27.70
18.47
2,484.69
19,113
57.00
31.50
172.1
990
1000
1100
650
(3.15)
1.90
2.10
26.43
23.91
8,642.86
8,730
5
4.60
5.75
3.15
164.2
163
140
150
650
0.27
0.26
0.30
17.69
15.33
755.32
4,634
2
34.03
50.27
31.17
1,000.4
7600
7500
7800
600
4.50
3.80
5.20
8.96
6.54
34,043.61
4,479
3
0.91
1.72
0.41
1,082.4
205
200
300
600
0.17
0.10
0.50
9.10
1.82
984.98
4,805
2
642
390
610
650
0.92
0.50
0.80
20.00
12.50
2,360.00
3,676
4
611
620
700
500
0.58
0.50
0.60
25.84
21.53
9,311.44
15,240
5
10
400
749
-
-
0.26
-
91.42
2,688.39
-
5
AEM
ARZ
ABX
50.22
Centamin PLC
Centerra Gold
Eldorado Gold
Detour Gold
CEE
CG
ELD
DGC
Goldcorp
Iamgold Corp
Kinross Gold
New Gold
G
IMG
K
NGD
Newmont Mine
Osisko
Yamana
NMC
OSK
YRI
2011
PE Multiple
180
40.18
Cost
Per Share Earnings
130
27.70
2011 2012E 2013E
$/oz
89.7
ANV
Low
Production oz (000)
23.96
Allied Nevada
Agnico Eagle
Aurizon
Barrick Gold
High
Shares
(Mil)
4
10.00
22.35
6.20
236.0
12.92
15.78
9.94
720.7
23.77
29.80
18.45
113.1
-
36.86
50.17
32.32
811.0
2500
2400
2600
650
2.10
2.00
2.50
18.43
14.74
29,893.46
11,957
1
10.84
17.77
9.31
376.1
970
840
950
720
1.08
0.85
1.30
12.75
8.34
4,076.92
4,203
1
9.56
13.20
7.14
1,135.0
2600
2500
2600
710
(1.95)
0.65
1.00
-
9.56
10,850.60
4,173
2
10.80
12.50
7.20
475.0
390
425
475
475
0.43
0.50
0.75
21.60
14.40
5,130.00
13,154
4
45.18
65.77
43.75
490.7
5300
5100
5300
650
4.50
4.55
5.10
9.93
8.86
22,169.83
4,183
3
7.99
12.98
6.25
181
445
600
800
0.12
0.40
0.85
19.98
9.40
3,486.84
19,264
5
17.12
20.61
12.76
436.4
764.0
1100
1200
1300
500
0.76
1.10
1.30
15.56
13.17
13,079.68
11,891
2
Rank From 1 lowest to 5 highest
Gold Price
2010 $1,350
2011 $1,700
2012 $1,900
2013E $2,000
John R. Ing
416-947-6040
Company Name
Barrick Gold Corp
Centamin
Centerra
Eldorado Gold Corp
Excellon
Trading Symbol
ABX
CEE
CG
ELD
EXN
*Exchange
T
T
T
T
T
Disclosure
1
1
1
1
1,6
Performance Rating
Analyst Disclosure
Disclosure Key: 1=The Analyst, Associate or member of their household owns the securities of the subject issuer. 2=Maison Placements Canada Inc.
and/or affiliated companies beneficially own more than 1% of any class of common equity of the issuers. 3=<Employee name> who is an officer or
director of Maison Placements Canada Inc. or it's affiliated companies serves as a director or advisory Board Member of the issuer. 4=Maison
Placements Canada Inc. has managed co-managed or participated in an offering of securities by the issuer in the past 12 months. 5=Maison
Placements Canada Inc. has received compensation for investment banking and related services from the issuer in the past 12 months. 6=The
analyst has paid a visit to review the material operations of the issuer within the past 12 months. 7=The analyst has received payment or
reimbursement from the issuer regarding a visit made within the past 12 months. T-Toronto; V-TSX Venture; NQ-NASDAQ; NY-New York Stock
Exchange
Disclosures
Rating Structure
Analysts at Maison use two main rating structures: a performance rating and a number rating system.
Performance Rating: Out perform: The target price is more than 25% over the most recent closing price. Market Perform: The target price is more than
15% but less than 25% of the most recent closing price. Under Perform: The target price is less than 15% over the most recent closing price.
Number Rating: Our number rating system is a range from 1 to 5. (1=Strong Sell; 2=Sell; 3=Hold; 4=Buy; 5=Strong Buy) With 5 considered among the
best performers among its peers and 1 is the worst performing stock lagging its peer group. A 3 would be market perform in line with the TSX market. NR
is no rating given that the company is either a new issue/ waiting to clear or we do not have an opinion.
Analyst’s Certification: As to each company covered in this report, each analyst certifies that the views expressed accurately reflect the analyst’s personal
views about the subject securities or issuers. Each analyst has not, and will not receive, directly or indirectly compensation in exchange for expressing
specific recommendations in this report.
Analyst’s Compensation: The compensation of the analyst who prepared this research report is based upon in part; the overall revenues and profitability of
Maison Placements Canada Inc. Analysts are compensated on a salary and bonus system. Some factors affecting compensation include the productivity and
quality of research, support to institutional, investment bankers, net revenues to the equity and investment banking revenue as well as compensation levels
for analysts at competing brokerage dealers.
Analyst Stock Holdings: Equity research analysts and members of their households are permitted to invest in securities covered by them. No Maison
analyst, or employee is permitted to effect a trade in the security of an issuer whereby there is an outstanding recommendation for a period of thirty calendar
days before and five calendar days after the issuance of the research report.
Dissemination of Research: Maison disseminates its hard copy research material to their clients using the postage service and couriers. Samples of our
research material are available on our web site. Electronic formats are available upon request.
General Disclosures: This report is approved by Maison Placements Canada Inc. (“Maison”) which is a Canadian investment dealer and a participating
member of the Toronto Stock Exchange and TSX Venture Exchange and is regulated by the Investment Industry Regulatory Organization of Canada
(IIROC).
The information contained in this report has been compiled by Maison from sources believed to be reliable, but no representation or warranty, express or
implied, is made by Maison, its affiliates or any other person as to its accuracy, completeness or correctness. All estimates, opinions and other information
contained in this report constitute Maison’s judgment as of the date of this report, are subject to change without notice and are provided in good faith but
without legal responsibility or liability.
Maison and its affiliates may have an investment banking or other relationship with the company that is the subject of this report and may trade in any of the
securities mentioned herein either for their own account or the accounts of their customers. Accordingly, Maison or their affiliates may at any time have a
long or short position in any such securities, related securities or in options, futures, or other derivative instruments based thereon.
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 offer or solicitation would be prohibited. As a result, the securities discussed in this report may not be eligible for sale in some
jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by
any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction.
This material is prepared for general circulation to clients and does not have regard to the investment objective, financial situation or particular needs of any
particular person. Investors should obtain advice on their own individual circumstances before making an investment decision. To the fullest extent
permitted by law, neither Maison, its affiliates nor any other person accepts any liability whatsoever for any direct or consequential loss arising from any use
of the information contained in this report.
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