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Table of Contents These reports were compiled using a product of Thomson Financial. www.thomson.com/financial 1 Rpt. 13650540 PRECIOUS METALS & MINERALS - WEEKLY VALUATION TABLES 2 - 25 03-Jul-2008 RBC CAPITAL MARKETS (CANADA) - WALKER, STEPHEN DAVID, ET AL Rpt. 13465866 PRECIOUS METALS & MINERALS - DIAMOND FUNDAMENTALS POSITIVE; 26 - 42 08-May-2008 RBC CAPITAL MARKETS (US) - KILALEA, DES Rpt. 13252583 PRECIOUS METALS - DROPPING COVERAGE 43 - 55 16-Mar-2008 CIBC WORLD MARKETS CORP. - ANON Rpt. 12907830 METALS & MINING - PRECIOUS METALS - CAPITAL COSTS INCREASE 56 - 60 30-Nov-2007 BEAR STEARNS AND CO INC - DUDAS, MICHAEL, ET AL Rpt. 12792965 PRECIOUS METALS IN TIMES OF USD OVERSHOOTING - COMMODITIES 61 - 66 02-Nov-2007 DEUTSCHE BANC ALEX. BROWN FIXED INCOME - LEWIS, MICHAEL, ET AL Rpt. 12772080 PRECIOUS METALS - Q3 EARNINGS PREVIEW 67 - 84 30-Oct-2007 CREDIT SUISSE - NORTH AMERICA - SONI, ANITA, ET AL Rpt. 12742212 PRECIOUS METALS EQUITIES - THE "MULTIPLE" FANTASY 85 - 96 23-Oct-2007 HSBC GLOBAL RESEARCH - FLORES, VICTOR, ET AL

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Page 1: Precious Metals_Thomson Research

Table of Contents

These reports were compiled using a product of Thomson Financial. www.thomson.com/financial

1

Rpt. 13650540 PRECIOUS METALS & MINERALS - WEEKLY VALUATION TABLES 2 - 25

03-Jul-2008 RBC CAPITAL MARKETS (CANADA)

- WALKER, STEPHEN DAVID, ET AL

Rpt. 13465866 PRECIOUS METALS & MINERALS - DIAMOND FUNDAMENTALS POSITIVE; 26 - 42

08-May-2008 RBC CAPITAL MARKETS (US)

- KILALEA, DES

Rpt. 13252583 PRECIOUS METALS - DROPPING COVERAGE 43 - 55

16-Mar-2008 CIBC WORLD MARKETS CORP.

- ANON

Rpt. 12907830 METALS & MINING - PRECIOUS METALS - CAPITAL COSTS INCREASE 56 - 60

30-Nov-2007 BEAR STEARNS AND CO INC

- DUDAS, MICHAEL, ET AL

Rpt. 12792965 PRECIOUS METALS IN TIMES OF USD OVERSHOOTING - COMMODITIES 61 - 66

02-Nov-2007 DEUTSCHE BANC ALEX. BROWN FIXED INCOME

- LEWIS, MICHAEL, ET AL

Rpt. 12772080 PRECIOUS METALS - Q3 EARNINGS PREVIEW 67 - 84

30-Oct-2007 CREDIT SUISSE - NORTH AMERICA

- SONI, ANITA, ET AL

Rpt. 12742212 PRECIOUS METALS EQUITIES - THE "MULTIPLE" FANTASY 85 - 96

23-Oct-2007 HSBC GLOBAL RESEARCH

- FLORES, VICTOR, ET AL

Page 2: Precious Metals_Thomson Research

INDUSTRY | COMMENTJULY 3, 2008

Precious Metals & Minerals

Weekly Valuation Tables

Event

We are publishing our weekly gold, silver, PGM and diamond equityvaluation tables.This week we provide a snapshot of the performance of NorthAmerican stocks in our gold coverage universe over different time horizons.We note the underperformance of the emerging gold names relative to seniorproducers and bullion over several time periods up to one year.Exhibit 1 - North American Gold Equities Performance

02-Jul Q2-08 Q1-08 YTD 1-Year

Barrick Gold $45.18 5.2% 2.8% 7.4% 52.2%

Goldcorp $46.01 19.3% 14.1% 35.7% 90.1%

Kinross Gold $23.17 6.8% 20.2% 25.9% 90.2%

Newmont Mining $50.99 15.4% -7.4% 4.4% 28.4%

Tier I average 11.7% 7.4% 18.4% 65.2%

Agnico-Eagle $73.61 9.8% 23.9% 34.7% 98.1%

Centerra Gold C$ 4.47 -64.6% 7.1% -64.4% -57.6%

Eldorado $8.51 26.8% 17.6% 46.7% 35.3%

Franco-Nevada C$ 23.73 22.7% 31.7% 55.2% n.a.

High River Gold C$ 1.60 -41.4% -7.4% -43.7% -44.8%

IAMGOLD $6.28 -17.5% -9.5% -22.5% -16.9%

Yamana Gold $16.17 13.4% 12.8% 25.0% 42.3%

Tier II average -7.3% 10.9% 4.4% 9.4%

Alamos Gold C$ 6.20 2.5% 8.5% 12.1% 12.7%

International Minerals C$ 5.10 -19.8% 10.0% -12.4% -9.1%

Jaguar Mining C$ 10.17 -9.6% -9.8% -15.9% 38.0%

NovaGold Resources C$ 7.96 -4.0% -1.5% -1.7% -50.6%

Western Goldfields C$ 2.49 -27.1% -15.7% -34.6% -4.6%

Tier III average -11.6% -1.7% -10.5% -2.7%

Anatolia Minerals C$ 3.29 -15.2% -18.5% -33.3% -44.5%

Andean C$ 1.45 -7.7% -14.4% -19.9% 48.0%

Aurelian Resources C$ 5.50 -38.8% 20.2% -28.2% -14.9%

European Goldfields C$ 4.85 -11.2% -2.2% -11.5% -14.0%

Gabriel Resources C$ 2.57 63.3% -14.2% 30.5% -46.1%

Gold Reserve $1.73 -61.0% -11.3% -66.7% -69.0%

Greystar C$ 4.00 -34.4% -6.3% -36.5% -42.9%

Osisko Exploration C$ 4.20 -12.7% -16.1% -28.8% -23.6%

Emerging average -14.7% -7.8% -24.3% -25.9%

GOLD (spot) $945 0.9% 9.9% 13.3% 43.8%

Source: Bloomberg

Priced as of prior trading day's market close, EST (unless otherwise noted).All values in USD unless otherwise noted.

RBC Dominion Securities Inc.

Stephen D. Walker (Analyst)(416) 842-4120; [email protected]

Michael Curran, CFA (Analyst)(416) 842-3770; [email protected]

Royal Bank of Canada - Sydney Branch

Geoff Breen (Analyst)(+61) 2 9033-3022; [email protected]

Royal Bank of Canada Europe Limited

Cailey Barker (Analyst)(+44) 207 653-4603; [email protected]

Leon Esterhuizen (Analyst)(+44) 207 653-4154;[email protected]

Des Kilalea (Analyst)(+44) 207 653-4538; [email protected]

For Required Disclosures, please see Page 23.

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July 2008 Corporate Marketing

Date Company Presenters Location June 30 – July 1 Platmin Ltd (PPN) Ian Watson, CEO

Rupert Pardoe, Chairman Ralf Degni, CFO

New York

July 2 Platmin Ltd (PPN) Ian Watson, CEO Rupert Pardoe, Chairman Ralf Degni, CFO

Boston

July 3-4 Platmin Ltd (PPN) Ian Watson, CEO Rupert Pardoe, Chairman Ralf Degni, CFO

Toronto

July 8-9 Tiger Resources (TGS.AU) David Young, MD Toronto

Conferences, Site Visits & Other

Date Topic Presenters Location August 1 RBC Mining Conference Perth, Australia August 4-6 Diggers & Dealers Kalgoorlie, Australia November 13 Gold Conference London, UK

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Price Report Target Return to 52 Wk 52 Wk NAV/sh Shares Mkt Cap AMC (1)Company Tick Curr Curr Analyst Rating Risk Price (12m) Target High Low Est P/NAV (MM) (US$M) (US$M)

Tier I Gold ProducersKinross Gold KGC USD USD SW O AA $23.17 $27.00 17% $27.40 $9.87 $14.52 1.60x 597 $13,824 $13,862Lihir Gold LGL AUD AUD GB O AA A$3.32 A$4.00 20% A$4.45 A$2.71 A$2.60 1.28x 1,904 $6,085 $5,869Harmony Gold HAR ZAR ZAR LE O AA R95.30 R150.00 57% R118.50 R60.00 R136.62 0.70x 403 $4,884 $4,977Newcrest NCM AUD AUD GB O A A$31.01 A$36.00 16% A$40.50 A$22.53 A$23.07 1.34x 453 $13,528 $13,766Goldcorp Inc. GG USD USD MC SP A $46.01 $50.00 9% $49.10 $21.00 $21.60 2.13x 731 $33,617 $32,196Barrick Gold ABX USD USD SW SP A $45.18 $48.00 7% $54.74 $28.89 $29.25 1.54x 865 $39,081 $40,322AngloGold Ashanti ANG ZAR ZAR LE SP AA R267.90 R370.00 38% R326.72 R230.53 R431.72 0.62x 278 $9,465 $11,696Newmont NEM USD USD SW SP AA $50.99 $53.00 5% $57.55 $38.01 $34.51 1.48x 450 $22,946 $24,704Gold Fields GFI ZAR ZAR LE U A R98.00 R130.00 33% R137.40 R84.00 R141.94 0.69x 653 $8,134 $8,413Average 23% 1.26x $16,840 $17,312Total $151,563 $155,804

Tier II Gold ProducersIAMGOLD Corporation IAG USD USD MC O A $6.28 $11.00 76% $10.43 $5.59 $9.06 0.69x 296 $1,856 $1,680Simmer & Jack Mines SIM ZAR ZAR LE O A R3.76 R14.00 272% R7.25 R3.70 R13.68 0.27x 1,062 $508 $445Centerra Gold CG CAD USD SW SP Spec C$4.47 C$6.00 34% C$16.08 C$3.16 C$7.87 0.57x 216 $954 $713Franco-Nevada FNV CAD USD SW SP A C$23.73 C$24.00 2% C$24.96 C$13.63 C$13.66 1.74x 100 $2,350 $2,059Eldorado Gold Corp. EGO USD USD MC SP A $8.51 $8.50 (0%) $9.34 $3.25 $4.61 1.85x 352 $2,999 $2,901Yamana Gold Inc. AUY USD USD MC SP A $16.17 $18.00 12% $19.93 $8.40 $8.12 1.99x 678 $10,962 $11,323High River Gold Mines HRG CAD CAD MC SP AA C$1.60 C$2.25 41% C$3.50 C$1.35 C$1.30 1.23x 350 $553 $639Agnico-Eagle Mines AEM USD USD MC SP AA $73.61 $81.00 10% $83.45 $34.24 $28.26 2.60x 144 $10,578 $10,106Average 56% 1.37x $3,845 $3,733Total $30,759 $29,866Source: Company Reports, RBCCM EstimatesRBCCM’s gold price forecasts for 2008,2009 and 2010 are $910/oz, $935/oz and $965/oz respectively, with a long-term price of $1,000/oz.(1) AMC (Adjusted Market Cap) calculated as market cap plus long-term debt less working capital

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Free CFCompany Tick CFPS P/CFPS (2) EPS P/E (2) Yield (3)

Tier I Gold Producers 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2007Kinross Gold KGC $0.82 $1.28 $1.94 $2.11 18.1x 12.0x 11.0x $0.56 $0.97 $1.47 $1.46 24.0x 15.8x 15.9x (0.4%) 6.7% 10.6%Lihir Gold (4) LGL $0.09 $0.13 $0.20 $0.24 26.1x 16.9x 14.1x $0.07 $0.10 $0.16 $0.20 34.7x 20.5x 16.9x (1.7%) 0.2% 5.3%Harmony Gold * HAR R3.78 R3.96 R12.86 R15.83 24.1x 7.4x 6.0x R0.86 R1.21 R8.50 R12.94 79.0x 11.2x 7.4x (1.0%) (11.9%) 1.4%Newcrest * NCM A$1.25 A$1.82 A$2.14 A$2.15 17.0x 14.5x 14.4x A$0.58 A$1.15 A$1.54 A$1.51 27.0x 20.2x 20.6x 0.6% 1.7% 13.8%Goldcorp Inc. GG $1.16 $1.58 $1.95 $2.72 29.1x 23.6x 16.9x $0.60 $1.03 $1.22 $1.85 44.7x 37.6x 24.9x (5.2%) (2.9%) 5.5%Barrick Gold ABX $2.41 $3.49 $3.51 $3.62 12.9x 12.9x 12.5x $1.26 $2.46 $2.51 $2.61 18.4x 18.0x 17.3x (0.9%) 1.5% 7.6%AngloGold Ashanti ANG R26.34 R15.64 R29.48 R35.26 17.1x 9.1x 7.6x R7.00 R2.32 R15.42 R21.91 n.m. 17.4x 12.2x 3.2% (19.5%) 6.6%Newmont NEM $4.08 $4.74 $5.64 $6.23 10.8x 9.0x 8.2x $1.66 $1.84 $2.54 $3.07 27.7x 20.1x 16.6x (1.7%) 0.1% 9.4%Gold Fields * GFI R4.50 R11.01 R14.22 R16.28 8.9x 6.9x 6.0x R4.23 R4.70 R8.99 R10.72 20.9x 10.9x 9.1x 4.7% 8.6% 5.4%Average 18.2x 12.5x 10.7x 34.5x 19.1x 15.7x (0.3%) (1.7%) 7.3%

Tier II Gold ProducersIAMGOLD Corporation IAG $0.66 $0.93 $1.02 $1.06 6.7x 6.1x 5.9x $0.21 $0.37 $0.48 $0.63 17.0x 13.1x 10.0x (2.7%) 3.6% 3.4%Simmer & Jack Mines * SIM (R0.33) R0.29 R1.30 R2.30 12.8x 2.9x 1.6x (R0.20) (R0.22) R0.22 R1.14 n.m. 16.8x 3.3x (28.6%) (18.6%) 6.5%Centerra Gold CG $0.38 $1.26 $1.33 $1.50 3.5x 3.3x 2.9x $0.18 $0.86 $0.92 $1.06 5.1x 4.8x 4.2x (4.6%) 20.9% 5.3%Franco-Nevada FNV ($0.00) $1.23 $1.11 $1.05 19.1x 21.1x 22.3x ($0.38) $0.48 $0.41 $0.34 49.2x 57.8x 68.5x n.m. 1.4% n.a.Eldorado Gold Corp. EGO $0.23 $0.38 $0.50 $0.58 22.3x 17.1x 14.6x $0.13 $0.27 $0.40 $0.46 31.5x 21.4x 18.5x (2.2%) 1.0% 10.3%Yamana Gold Inc. AUY $0.59 $1.12 $1.36 $1.38 14.4x 11.9x 11.7x $0.45 $0.91 $0.97 $0.91 17.8x 16.7x 17.7x (7.8%) 0.0% 4.9%High River Gold Mines HRG C$0.04 C$0.16 C$0.33 C$0.37 9.9x 4.9x 4.3x (C$0.05) C$0.08 C$0.23 C$0.27 20.1x 7.0x 6.0x (32.3%) (3.9%) (4.7%)Agnico-Eagle Mines AEM $1.69 $1.84 $3.67 $5.20 40.0x 20.1x 14.2x $1.13 $1.29 $2.30 $3.77 57.2x 32.0x 19.5x (3.0%) (3.1%) 9.1%Average 16.1x 10.9x 9.7x 28.3x 21.2x 18.5x (11.6%) 0.2% 5.0%

Source: Company Reports, RBCCM Estimates(2) P/CFPS and P/E multiples higher than 80x excluded from analysis(3) Free Cash Flow is calculated as: Operating Cash Flow - Debt Repayments - Capex(4) Adjusted: hedging losses excluded

* Harmony Gold, Newcrest Mining and Gold Fields figures are for the year ended June 30. Simmer & Jack figures are for the year ended March 31.

ROE

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Reserve Resource AMC/ AMC/ Resource/Company Tick Production (000 oz) Cash Costs (US$/oz) (5) (P&P) (6) (M&I) (6) Rsrv (6,7) Rsrc (6,7) Reserve

Tier I Gold Producers 2007 2008E 2009E 2010E 3Y∆ 2007 2008E 2009E 2010E 3Y∆ Oz (000s) Oz (000s) (US$/oz) (US$/oz)Kinross Gold KGC 1,585 2,104 2,690 2,674 19.1% $365 $402 $381 $373 0.7% 43,000 54,600 $241 $188 1.27xLihir Gold LGL 701 726 924 1,012 13.0% $301 $409 $379 $367 6.7% 22,900 40,600 $256 $145 1.77xHarmony Gold * HAR 2,334 1,716 1,935 2,053 (4.2%) $486 $641 $566 $539 3.5% 53,200 132,292 $94 $34 2.49xNewcrest NCM 1,604 1,763 1,708 1,751 3.0% $329 $278 $383 $413 7.9% 33,000 54,600 $235 $134 1.65xGoldcorp Inc. GG 2,360 2,404 2,791 3,514 14.2% $288 $346 $304 $262 (3.1%) 43,400 67,500 $484 $331 1.56xBarrick Gold ABX 8,060 7,600 7,386 7,526 (2.3%) $350 $407 $416 $410 5.5% 124,600 175,200 $234 $171 1.41xAngloGold Ashanti ANG 5,477 4,936 5,346 5,719 1.5% $357 $419 $421 $418 5.4% 73,113 161,042 $160 $73 2.20xNewmont NEM 5,315 5,139 5,586 5,798 2.9% $406 $452 $446 $446 3.2% 86,530 101,881 $214 $183 1.18xGold Fields * GFI 4,024 3,709 3,951 4,085 0.5% $376 $504 $478 $475 8.1% 89,890 222,124 $94 $38 2.47xAverage 3,496 3,344 3,591 3,792 5.3% $362 $429 $419 $411 63,293 112,204 $223 $144 1.78xTotal 31,461 30,096 32,316 34,132 569,633 1,009,839

Tier II Gold ProducersIAMGOLD Corporation IAG 966 918 931 851 (4.1%) $423 $462 $458 $456 2.5% 7,975 22,669 $211 $74 2.84xSimmer & Jack Mines * SIM 140 155 245 424 44.7% $612 $785 $714 $654 2.2% 6,696 14,840 $42 $22 2.22xCenterra Gold CG 543 795 812 816 14.6% $474 $461 $485 $480 0.5% 7,000 12,300 $102 $58 1.76xFranco-Nevada FNV n.a. n.a. n.a. n.a. - n.a. n.a. n.a. n.a. - n.a. n.a. n.m. n.m. n.m.Eldorado Gold Corp. EGO 267 285 362 414 15.7% $262 $272 $280 $300 4.5% 7,655 10,415 $379 $279 1.36xYamana Gold Inc. AUY 588 1,209 1,570 1,645 40.9% $336 $348 $337 $349 1.3% 17,915 30,785 $632 $368 1.72xHigh River Gold Mines HRG 132 251 336 353 38.7% $457 $534 $484 $503 3.3% 2,566 3,865 $233 $158 1.51xAgnico-Eagle Mines ** AEM 231 301 760 1,281 77.1% ($358) $343 $311 $278 n.m. 16,659 19,458 $466 $405 1.17xAverage 410 559 717 826 32.5% $427 $458 $438 $431 9,495 16,333 $239 $195 1.80xTotal 2,867 3,913 5,017 5,784 66,466 114,332Source: Company Reports, RBCCM Estimates(5) Cash cost per ounce averages exclude negative outliers(6) Reserves and Resources in gold only, AMC/oz in gold equivalent assuming prices of US$600/oz Au, US$16.50/oz Ag, US$2.50/lb Cu, US$1.50/lb Zn(7) AMC/oz of reserves and resources higher than US$600/oz excluded from averages

* Harmony Gold, Newcrest Mining and Gold Fields figures are for the year ended June 30. Simmer & Jack figures are for the year ended March 31** Agnico-Eagle cash cost figures reflect the by-product method for 2007, and the co-product method thereafter as new mines come on-line

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Price Report Target Return to 52 Wk 52 Wk NAV/sh Shares Mkt Cap AMC (1)Company Tick Curr Curr Analyst Rating Risk Price (12m) Target High Low Est P/NAV (MM) (US$M) (US$M)

Tier III Gold ProducersWestern Goldfields Inc. WGI CAD USD MC O AA C$2.49 C$3.75 51% C$4.13 C$1.73 $2.80 0.88x 136 $335 $372Jaguar Mining Inc. JAG CAD USD MC O AA C$10.17 C$16.00 57% C$14.45 C$5.36 C$8.46 1.19x 72 $721 $699Great Basin Gold GBG CAD CAD LE O A C$3.47 C$5.00 44% C$3.83 C$1.98 C$7.23 0.48x 203 $697 $668First Uranium Corp FIU CAD USD AS O AA C$6.13 C$10.50 71% C$12.00 C$5.92 C$12.38 0.50x 131 $793 $685Pamodzi Gold PZG ZAR ZAR LE O Spec R5.70 R30.00 426% R19.75 R5.00 R34.96 0.16x 94 $68 $163Central African Gold CAN GBP USD CB O Spec £0.19 £0.70 273% £0.60 £0.18 £0.90 0.21x 166 $62 $81Pan African Resources PAF GBP GBP LE O Spec £0.06 £0.15 174% £0.10 £0.05 £0.16 0.34x 1,079 $118 $116Avoca Resources AVO AUD AUD GB O AA A$2.19 A$2.50 14% A$2.91 A$1.26 A$1.35 1.63x 219 $462 $470Alamos Gold AGI CAD USD SW O AA C$6.20 C$9.00 45% C$8.40 C$4.82 C$5.88 1.05x 95 $583 $538DRDGOLD DRD ZAR ZAR LE SP Spec R5.96 R12.00 101% R10.25 R3.50 R12.07 0.49x 376 $285 $318Highland Gold HGM GBP USD CB SP AA £1.73 £1.80 4% £2.52 £0.75 £1.01 1.71x 325 $1,121 $856NovaGold Resources NG CAD CAD SW U Spec C$7.96 C$9.00 13% C$19.99 C$5.90 C$8.69 0.92x 106 $832 $846Uruguay Mineral Expl. UGY GBP USD DK U Spec £1.21 £1.25 9% £1.87 £1.12 £3.16 0.38x 52 $125 $80International Minerals IMZ CAD USD MC U Spec C$5.10 C$6.00 18% C$6.65 C$4.46 C$6.03 0.85x 110 $554 $523Average 93% 0.77x $483 $458Total $6,755 $6,413

Emerging Gold ProducersAnatolia Minerals ANO CAD USD MC TP Spec C$3.29 C$7.50 128% C$6.99 C$2.95 $5.15 0.63x 83 $270 $135Andean Resources AND CAD AUD SW O Spec C$1.45 C$2.50 72% C$2.05 C$0.71 $2.05 0.71x 394 $565 $521European Goldfields EGU CAD USD SW O Spec C$4.85 C$9.50 96% C$7.20 C$4.22 C$9.45 0.51x 179 $858 $858Banro Corporation BAA CAD USD CB O Spec C$7.20 C$17.00 136% C$13.00 C$6.70 C$16.76 0.43x 40 $283 $249Greystar Resources Ltd. GSL CAD CAD MC O Spec C$4.00 C$8.50 113% C$8.45 C$3.60 C$9.65 0.41x 46 $182 $138Osisko Exploration Ltd. OSK CAD CAD MC O Spec C$4.20 C$7.75 85% C$7.24 C$3.59 C$6.30 0.67x 178 $736 $589Axmin Inc. AXM GBP USD CB O SP C$0.44 C$1.10 153% C$1.09 C$0.40 C$1.10 0.39x 216 $187 $179Central Rand Gold CRND GBP GBP LE O A £0.86 £1.90 121% £1.49 £0.81 £2.90 0.30x 246 $422 $421Aflease Gold AFO ZAR ZAR LE SP AA R2.70 R3.75 39% R615.00 R1.85 R3.05 0.89x 523 $180 $174Aurelian Resources Inc. ARU CAD CAD MC SP Spec C$5.50 C$8.00 45% C$10.23 C$3.05 C$11.19 0.49x 135 $735 $685Gabriel Resources GBU CAD CAD SW U Spec C$2.57 C$2.30 (11%) C$4.95 C$1.27 C$3.06 0.84x 255 $647 $539Gold Reserve Inc. GRZ USD USD MC U Spec $1.73 $2.00 16% $6.00 $1.20 $2.16 0.80x 55 $94 -$19Mintails MLI AUD AUD LE U Spec A$0.30 A$0.65 120% A$0.86 A$0.31 A$0.28 n.m. 695 $197 $191Wits Gold WGR ZAR ZAR LE U Spec R94.00 R150.00 60% R180.10 R79.90 R58.34 n.m. 27 $326 $320Average 84% 0.59x $406 $356Total $5,682 $4,980

Source: Company Reports, RBCCM EstimatesRBCCM’s gold price forecasts for 2008,2009 and 2010 are $910/oz, $935/oz and $965/oz respectively, with a long-term price of $1,000/oz.(1) AMC (Adjusted Market Cap) calculated as market cap plus long-term debt less working capital

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Free CFCompany Tick CFPS P/CFPS (2) EPS P/E (2) Yield (3)

Tier III Gold Producers 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2007Western Goldfields Inc. WGI ($0.19) $0.27 $0.29 $0.42 9.0x 8.6x 5.8x ($0.22) $0.29 $0.17 $0.26 8.49423 14.7x 9.4x n.m. n.m. n.m.Jaguar Mining Inc. JAG ($0.12) $0.38 $1.41 $2.03 26.7x 7.1x 4.9x ($0.25) $0.31 $1.00 $1.45 31.9x 10.1x 6.9x n.m. n.m. n.m.Great Basin Gold GBG (C$0.31) C$0.18 C$0.71 C$8.61 18.8x 4.9x 0.4x (C$0.25) C$0.12 C$0.46 C$0.66 28.3x 7.6x 5.3x (19.3%) (5.3%) (16.3%)First Uranium Corp * FIU ($0.16) ($0.05) $0.14 $1.61 n.m. 43.4x 3.8x ($0.08) ($0.08) $0.09 $1.47 n.m. 67.2x 4.1x n.m. n.m. n.m.Pamodzi Gold PZG R2.58 R9.21 R10.13 R9.78 0.6x 0.6x 0.6x (R5.00) R1.44 R7.97 R8.64 4.0x 0.7x 0.7x (27.1%) (27.1%) 32.1%Central African Gold CAN ($0.04) $0.17 $0.25 $0.25 2.2x 1.5x 1.5x ($0.04) $0.15 $0.23 $0.22 2.4x 1.6x 1.7x 1.8% (16.4%) n.m.Pan African Resources PAF (£0.00) £0.01 £0.01 £0.02 7.4x 4.5x 2.8x (£0.00) £0.01 £0.00 £0.02 10.4x 11.1x 3.5x (10.6%) 6.1% (11.5%)Avoca Resources AVO ($0.02) ($0.01) $0.27 $0.33 n.m. 8.1x 6.7x ($0.03) ($0.01) $0.16 $0.20 n.m. 14.1x 11.0x (3.5%) (26.0%) (4.4%)Alamos Gold AGI $0.14 $0.48 $0.60 $0.79 12.9x 10.2x 7.8x $0.03 $0.29 $0.40 $0.53 20.9x 15.3x 11.5x 0.1% 5.1% 2.1%DRDGOLD DRD (R0.35) R0.90 R1.78 R2.03 6.6x 3.3x 2.9x (R2.74) R0.61 R1.45 R1.69 9.8x 4.1x 3.5x n.m. n.m. n.m.Highland Gold HGM $0.06 $0.11 $0.21 $0.06 32.7x 16.5x 57.1x $0.08 $0.03 $0.14 $0.04 n.m. 24.9x n.m. (22.4%) (23.1%) 1.9%NovaGold Resources NG (C$0.43) C$0.11 C$0.36 C$0.31 72.5x 22.2x 25.6x (C$0.41) C$0.01 C$0.18 C$0.16 n.m. 44.4x 48.3x n.m. n.m. n.m.Uruguay Mineral Expl. UGY $0.52 $0.58 $0.32 $0.34 4.1x 7.6x 7.1x $0.30 $0.39 $0.44 $0.21 6.1x 5.4x 11.2x 6.1% 23.1% 5.0%International Minerals * IMZ $0.04 $0.15 $0.60 $0.68 33.4x 8.4x 7.4x $0.04 $0.15 $0.48 $0.52 33.4x 10.5x 9.6x n.m. n.m. n.m.Average 18.9x 10.5x 9.6x 15.6x 16.5x 9.7x (9.4%) (8.0%) 1.3%

Emerging Gold ProducersAnatolia Minerals ANO ($0.16) ($0.21) ($0.23) $0.44 n.m. n.m. 7.4x ($0.21) ($0.19) ($0.23) $0.26 n.m. n.m. 12.6xAndean Resources * AND (A$0.01) (A$0.02) (A$0.02) (A$0.02) n.m. n.m. n.m. (A$0.02) (A$0.03) (A$0.02) (A$0.02) n.m. n.m. n.m.European Goldfields EGU $0.22 $0.21 $0.26 $1.47 23.0x 18.3x 3.3x $0.15 $0.16 $0.19 $1.26 29.8x 25.5x 3.8xBanro Corporation BAA ($0.12) ($0.19) ($0.13) ($0.50) n.m. n.m. n.m. ($0.09) ($0.19) ($0.30) ($1.08) n.m. n.m. n.m.Greystar Resources Ltd. GSL (C$0.32) (C$0.27) (C$0.27) C$0.43 n.m. n.m. 9.2x (C$0.32) (C$0.27) (C$0.27) C$0.20 n.m. n.m. 19.6xOsisko Exploration Ltd. OSK (C$0.05) (C$0.02) (C$0.03) (C$0.04) n.m. n.m. n.m. (C$0.05) C$0.01 (C$0.03) (C$0.04) n.m. n.m. n.m.Axmin Inc. AXM ($0.01) ($0.01) ($0.03) $0.12 n.m. n.m. 7.2x ($0.03) ($0.01) ($0.03) $0.11 n.m. n.m. 8.1xCentral Rand Gold CRND (£0.05) (£0.05) £0.07 £0.38 n.m. 13.2x 2.2x (£0.08) (£0.15) (£0.06) £0.26 n.m. n.m. 3.4xAflease Gold AFO (R0.14) (R0.09) R0.71 R1.33 n.m. 3.8x 2.0x (R0.15) (R0.10) R0.40 R0.66 n.m. 6.7x 4.1xAurelian Resources Inc. ARU (C$0.04) (C$0.04) (C$0.05) (C$0.05) n.m. n.m. n.m. (C$0.04) (C$0.04) (C$0.05) (C$0.05) n.m. n.m. n.m.Gabriel Resources GBU (C$0.07) (C$0.03) (C$0.04) (C$0.02) n.m. n.m. n.m. (C$0.10) (C$0.03) (C$0.04) (C$0.02) n.m. n.m. n.m.Gold Reserve Inc. GRZ ($0.22) ($0.22) ($0.22) ($0.22) n.m. n.m. n.m. ($0.22) ($0.22) ($0.22) ($0.22) n.m. n.m. n.m.Mintails * MLI (A$0.03) (A$0.01) A$0.05 A$0.09 n.m. n.m. n.m. (A$0.04) (A$0.04) A$0.05 A$0.08 n.m. 6.2x 3.5xWits Gold * WGR (R0.50) (R0.15) (R0.46) (R1.48) n.m. n.m. n.m. (R0.14) (R0.17) (R0.41) (R1.30) n.m. n.m. n.m.Average 23.0x 11.8x 5.2x 29.8x 12.8x 7.9x

Source: Company Reports, RBCCM Estimates(2) Averages exclude outliers(3) Free Cash Flow is calculated as: Operating Cash Flow - Debt Repayments - Capex* Andean, Mintails and International Minerals figures are for the year ended June 30. First Uranium Figures are for the year ended March 31* Wits Gold figures are for the year ended February 28.

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Reserve Resource AMC/ AMC/ Resource/Company Tick Production (000 oz) Cash Costs (US$/oz) (P&P) (4) (M&I) (4) Rsrv (4,5) Rsrc (4,5) Reserve

Tier III Gold Producers 2007 2008E 2009E 2010E 3Y∆ 2007 2008E 2009E 2010E 3Y∆ Oz (000s) Oz (000s) (US$/oz) (US$/oz)Western Goldfields Inc. WGI - 131 142 169 - - $478 $447 $421 - 2,767 3,869 $134 $96 1.40xJaguar Mining Inc. JAG 70 124 216 294 61.3% $362 $375 $310 $302 (5.9%) 1,139 2,641 $613 $265 2.32xGreat Basin Gold GBG - 97 230 362 - - $427 $190 $301 - 3,476 9,641 $192 $69 2.77xFirst Uranium Corp * FIU - 36 149 361 - - $450 $561 $248 - - 37,139 n.m. $58 n.m.Pamodzi Gold PZG 95 340 475 491 72.8% $1,253 $637 $563 $571 (23.0%) 3,584 25,553 $45 $6 7.13xCentral African Gold CAN 38 104 140 140 53.8% $643 $508 $430 $474 (9.7%) 1,959 3,609 $42 $23 1.84xPan African Resources PAF - 73 91 113 - - $500 $524 $506 - 485 1,932 $239 $60 3.98xAvoca Resources AVO 0 0 151 183 - - - $376 $362 - 581 1,352 $808 $347 2.33xAlamos Gold AGI 106 139 151 178 18.7% $425 $400 $375 $354 (6.0%) 1,700 3,619 $317 $149 2.13xDRDGOLD DRD 477 235 246 242 (20.2%) $591 $610 $563 $552 (2.3%) 10,911 15,304 $29 $21 1.40xHighland Gold HGM 150 160 292 283 23.4% $480 $487 $396 $436 (3.1%) 1 7 $901 $130 6.92xNovaGold Resources NG - 59 119 116 - - $447 $455 $476 - 510 22,020 $1,658 $19 n.m.Uruguay Mineral Expl. UGY 98 96 90 60 (15.1%) $290 $344 $359 $375 8.9% 522 885 $105 $113 1.70xInternational Minerals * IMZ - - - 52.45 - - $353 $186 $244 - 605 4,554 $700 $102 7.53xAverage 148 133 192 217 27.8% $578 $430 $410 $402 2,017 9,437 $123 $108 3.45xTotal 1,035 1,593 2,493 3,044 28,240 132,124

Emerging Gold ProducersAnatolia Minerals ANO - - - 117 - - - - $393 - 2,797 3,925 $44 $31 1.40xAndean Resources * AND - - - - - - - - - - - 1,578 n.m. $279 n.m.European Goldfields EGU - - 26 260 - - - n.a. - - 9,352 11,170 $33 $29 1.19xBanro Corporation BAA - - - - - - - - - - - 3,565 n.m. $70 n.m.Greystar Resources Ltd. GSL - - - 80 - - - - $315 - - 10,200 n.m. $14 n.m.Osisko Exploration Ltd. OSK - - - - - - - - - - - 8,370 n.m. $70 n.m.Axmin Inc. AXM - - - 94 - - - - $352 - 1,149 1,872 $155 $95 1.63xCentral Rand Gold CRND - 5 139 428 - - $3,061 $617 $529 - - 21,400 n.m. $20 n.m.Aflease Gold AFO - - 68 145 - - - $191 $293 - 1,356 2,940 $128 $59 2.17xAurelian Resources Inc. ARU - - - - - - - - - - - 13,700 n.m. $50 n.m.Gabriel Resources GBU - - - - - - - - - - 8,080 11,680 $57 $40 1.45xGold Reserve Inc. GRZ - - - 109 - - - - $185 - 10,400 12,100 -$2 -$2 1.16xMintails * MLI - 10 64 160 - - $947 $810 $735 - - 301 n.m. $114 n.m.Wits Gold * WGR - - - - - - - - - - - 19,466 n.m. $14 n.m.Average - 8 74 174 2,367 8,733 $69 $66 1.50xTotal - 16 297 1,393 33,134 122,267

Source: Company Reports, RBCCM Estimates(4) Reserves and Resources in gold only, AMC/oz in gold equivalent assuming prices of US$600/oz Au, US$16.50/oz Ag, US$2.50/lb Cu, US$1.50/lb Zn(5) AMC/oz of reserves and resources higher than US$600/oz for golds excluded from averages* Andean, Mintails and International Minerals figures are for the year ended June 30. First Uranium Figures are for the year ended March 31* Wits Gold figures are for the year ended February 28.

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Price Report Target Return to 52 Wk 52 Wk NAV/sh Shares Mkt Cap AMC (1)Company Tick Curr Curr Analyst Rating Risk Price (12m) Target High Low Est P/NAV (MM) (US$M) (US$M)

Silver CompaniesPan American Silver PAAS USD USD MC O A $34.68 $49.00 41% $44.10 $20.80 $19.89 1.74x 81 $2,825 $2,591Hecla Mining HL USD USD MC O A $8.53 $15.00 76% $13.14 $6.58 $5.74 1.49x 151 $1,292 $1,604Polymetal PMTL USD USD CB O AA $7.95 $10.50 32% $9.85 $4.50 $5.62 1.41x 315 $2,504 $2,343Silver Bear Resources SBR CAD CAD MC O Spec C$2.70 C$5.00 85% C$3.50 C$1.40 C$3.54 0.76x 36 $97 $66Ovoca Gold OVG GBP EUR CB O Spec £0.10 £0.17 70% £0.17 £0.08 £0.17 0.59x 425 $85 $68Silver Wheaton Corp. SLW USD USD MC SP A $14.87 $22.00 48% $19.54 $9.72 $8.91 1.67x 266 $3,958 $4,420Coeur d'Alene Mines CDE USD USD MC SP AA $2.70 $4.50 67% $5.18 $2.70 $2.72 0.99x 577 $1,558 $1,667Average 60% 1.24x $1,760 $1,823Total $12,319 $12,759

Diamond CompaniesRockwell Diamonds RDI CAD CAD DK O AA C$0.40 C$0.85 113% C$0.80 C$0.40 C$0.84 0.48x 214 $84 $58Harry Winston Diamond HWD USD USD IN/SW O AA $27.33 $35.00 29% $40.68 $21.78 n.a. n.a. 61 $1,677 $1,641Petra Diamonds PDL GBP USD DK O Spec £1.03 £1.60 56% £1.55 £0.94 £3.41 0.30x 184 $376 $351Shore Gold Inc. SGF CAD CAD SW O Spec C$2.55 C$5.25 106% C$5.61 C$2.52 C$5.18 0.49x 183 $460 $381Firestone Diamonds FDI GBP USD DK O Spec £1.24 £2.30 85% £2.06 £0.93 £2.10 0.59x 62 $152 $142African Diamonds AFD GBP USD DK O Spec £0.78 £1.40 79% £1.21 £0.70 £2.76 0.28x 81 $126 $122Gem Diamonds GEMD GBP USD DK O AA £9.91 £14.20 43% £12.16 £8.00 £11.34 0.87x 63 $1,242 $1,276Namakwa Diamonds NAD GBP USD DK SP Spec £1.40 £1.87 33% £1.85 £1.15 £1.94 0.72x 116 $325 $185Average 73% 0.50x $588 $567Total $4,118 $3,971

Source: Company Reports, RBCCM EstimatesRBCCM's silver price forecasts for 2008, 2009 and 2010 are $16.75/oz, $17.00/oz and $17.50/oz, with a long-term price of $15.00/oz.(1) AMC (Adjusted Market Cap) calculated as market cap plus long-term debt less working capital

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Free CFCompany Tick CFPS P/CFPS (2) EPS P/E (2) Yield (3)

Silver Companies 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2007Pan American Silver PAAS $1.39 $2.14 $2.88 $3.18 16.2x 12.0x 10.9x $0.93 $1.42 $2.15 $2.45 24.4x 16.1x 14.2x (1.2%) 3.9% 20.8%Hecla Mining HL $0.47 $0.79 $0.87 $1.07 10.8x 9.8x 8.0x $0.37 $0.38 $0.39 $0.58 22.5x 21.8x 14.6x 2.6% 2.7% 12.5%Polymetal PMTL $0.06 $0.45 $0.73 $0.84 17.8x 10.9x 9.5x $0.07 $0.62 $0.72 $0.63 12.7x 11.0x 12.5x (11.7%) 0.3% 4.2%Silver Bear Resources SBR (C$0.41) (C$0.52) (C$0.38) (C$0.22) n.m. n.m. n.m. (C$0.45) (C$0.55) (C$0.41) (C$0.24) n.m. n.m. n.m.Ovoca Gold OVG (€ 0.01) (€ 0.01) (€ 0.01) € 0.12 n.m. n.m. 1.1x (€ 0.01) (€ 0.01) (€ 0.01) € 0.08 n.m. n.m. 1.6x (14.7%) (41.6%) n.m.Silver Wheaton Corp. SLW $0.52 $0.76 $1.02 $1.35 19.6x 14.5x 11.0x $0.43 $0.64 $0.84 $1.13 23.4x 17.8x 13.2x (14.0%) (0.8%) 13.2%Coeur d'Alene Mines CDE $0.25 $0.16 $0.46 $0.65 17.3x 5.8x 4.2x $0.17 $0.10 $0.33 $0.49 27.5x 8.1x 5.5x (23.9%) (18.8%) 7.4%Average 16.3x 10.6x 7.4x 22.1x 15.0x 10.3x (10.5%) (9.1%) 11.6%

Diamond CompaniesRockwell Diamonds * RDI C$0.04 C$0.18 C$0.20 C$0.22 2.2x 2.0x 1.8x C$0.03 C$0.05 C$0.14 C$0.19 8.6x 2.9x 2.1x n.m. n.m. 2.8%Harry Winston Diamond * HWD $3.29 $4.14 $4.08 $3.32 6.6x 6.7x 8.2x $1.79 $1.82 $2.22 $1.59 15.0x 12.3x 17.2x 5.8% (2.2%) 20.8%Petra Diamonds PDL ($0.07) $0.11 $0.21 $0.33 18.1x 9.8x 6.1x ($0.14) $0.04 $0.14 $0.26 47.2x 15.1x 7.8x (47.6%) (42.0%) 4.6%Shore Gold Inc. SGF (C$0.01) (C$0.02) (C$0.05) (C$0.08) n.m. n.m. n.m. C$0.04 (C$0.03) (C$0.05) (C$0.08) n.m. n.m. n.m. n.m. n.m. n.m.Firestone Diamonds * FDI ($0.04) ($0.01) ($0.01) $0.00 n.m. n.m. n.m. ($0.02) ($0.02) ($0.02) ($0.01) n.m. n.m. n.m. (1.8%) (3.7%) (4.6%)African Diamonds AFD ($0.02) ($0.03) ($0.02) ($0.01) n.m. n.m. n.m. ($0.02) ($0.03) ($0.02) ($0.01) n.m. n.m. n.m. (1.4%) (1.7%) (5.1%)Gem Diamonds GEMD $0.70 $0.91 $1.16 $1.25 21.8x 17.0x 15.8x $0.37 $0.42 $0.64 $0.69 46.9x 30.9x 28.7x 0.0% 1.9% 2.9%Namakwa Diamonds NAD ($0.14) ($0.22) $0.03 $0.20 n.m. n.m. 13.7x ($0.25) ($0.16) $0.02 $0.20 n.m. n.m. 14.2x (12.8%) (16.6%) n/mAverage 12.2x 8.9x 8.0x 29.4x 15.3x 14.0x (9.0%) (9.5%) 3.6%

Source: Company Reports, RBCCM Estimates(2) Averages exclude outliers(3) Free Cash Flow is calculated as: Operating Cash Flow - Debt Repayments - Capex* Harry Winston figures are for the year ended January 31, Firestone Diamonds Figures are for the year ended June 30, Rockwell Diamonds figures are for the year ended May 31

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Production Reserve Resource AMC/ AMC/ Resource/Company Tick (Silvers M oz, Diamonds 000 carats) Cash Costs (US$/oz) (P&P) (4) (M&I) (5) Rsrv (4,5) Rsrc (4,5) Reserve

Silver Companies 2007 2008E 2009E 2009E 3Y∆ 2007 2008E 2009E 2009E 3Y∆ Oz (000s) Oz (000s) (US$/oz) (US$/oz)Pan American Silver PAAS 17.1 19.3 23.0 24.1 12.2% $3.34 $4.15 $4.46 $4.12 7.2% 213,400 309,300 $12.14 $8.38 1.45xHecla Mining HL 5.6 8.7 11.5 12.3 29.7% ($2.81) $2.27 $3.24 $3.00 n.m. 133,420 290,470 $8.27 $4.76 2.18xPolymetal PMTL 16.0 16.9 19.0 17.2 2.5% $0.21 ($0.66) ($0.92) ($0.79) (255.0%) 416,318 510,519 $3.05 $2.33 1.23xSilver Bear Resources SBR - - - - - - - - - - - - n.m. n.m. n.m.Ovoca Gold OVG - - - 5.7 - - - - $5.00 - - 47,170 n.m. $1.28 n.m.Silver Wheaton Corp. SLW 13.0 14.3 19.8 26.2 26.2% $3.90 $3.85 $3.82 $3.89 (0.1%) 346,400 508,400 $12.76 $8.69 1.47xCoeur d'Alene Mines CDE 11.5 15.4 23.3 25.6 30.7% $3.97 $4.57 $2.28 $1.95 (21.1%) 216,000 304,700 $7.72 $5.47 1.41xAverage 12.6 14.9 19.3 18.5 20.2% $1.23 $2.03 $1.84 $2.45 265,108 328,427 $8.79 $5.15 1.55xTotal 63.2 74.7 96.7 111.1 1,325,538 1,970,559

Diamond CompaniesRockwell Diamonds * RDI 39 23 50 60 15.4% 1,168$ $648 $680 $683 (16.4%) 0.65 0.65 $90 $90 1.00xHarry Winston Diamond * HWD 3,931 4,777 4,295 3,846 (0.7%) $25 $20 $26 $39 16.8% 82 105 $20 $16 1.28xPetra Diamonds PDL 145 166 389 575 58.5% $102 $153 $115 $101 (0.4%) 19 19 $19 $19 1.00xShore Gold Inc. SGF - - - - - - - - - - - 20.60 n.m. $18 n.m.Firestone Diamonds * FDI - - - - - - - - - - 11 11 $13 $13 1.00xAfrican Diamonds AFD - - 226 564 - - - $65 $59 - 15 15 $8 $8 1.00xGem Diamonds GEMD 53 772 915 937 160.5% 336$$$ 343$$$ $402 $426 8.2% 4 4 $290 $290 1.00xNamakwa Diamonds NAD n/a 10 70 99 - n/a $451 $458 $347 - - 17 n.m. $11 n.m.Average 1,042 1,435 1,175 1,197 58.4% $233 $166 $184 $187 19 25 $73 $65 1.05xTotal 4,167 5,739 5,874 5,983 132 175

Source: Company Reports, RBCCM Estimates(4) Silver reserves and resources in silver equivalent for Hecla, Pan American and Coeur d'Alene, silver only for Silver Wheaton.(5) AMC/oz of reserves and resources higher than US$15.00/oz for silvers excluded from averages* Harry Winston figures are for the year ended January 31, Firestone Diamonds Figures are for the year ended June 30, Rockwell Diamonds figures are for the year ended May 31

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Price Report Target Return to 52 Wk 52 Wk NAV/sh Shares Mkt Cap AMC (1)Company Tick Curr Curr Analyst Rating Risk Price (12m) Target High Low Est P/NAV (MM) (US$M) (US$M)

PGM CompaniesEastern Platinum Limited ELR CAD USD LE O A C$2.53 C$5.00 98% C$4.18 C$1.95 $3.86 0.65x 671 $1,677 $1,451Anooraq Resources ARQ CAD USD LE O A C$2.85 C$6.30 126% C$5.38 C$2.23 $1.79 1.57x 186 $523 $519Platmin PPN CAD USD LE O A C$7.35 C$14.00 90% C$11.33 C$5.51 $5.82 1.25x 112 $810 $829Platinum Group Metals PTM CAD USD LE O A C$2.94 C$6.60 124% C$4.46 C$2.19 $3.81 0.76x 62 $179 $168Impala Platinum IMP ZAR ZAR LE O AA R 297.00 R 380.00 32% R 368.00 R 172.02 R96.65 3.07x 632 $23,860 $22,757Ridge Mining Plc RDG GBP USD LE O Spec £1.09 £2.50 130% £1.51 £0.80 $2.49 0.87x 91 $196 $232Jubilee Platinum JLP GBP USD LE O Spec £0.49 £2.10 326% £2.60 £0.92 $0.77 1.27x 93 $91 $77Lonmin LMI GBP USD LE SP A £28.71 £38.00 38% £44.00 £27.36 $36.09 1.59x 156 $8,945 $8,936Wesizwe Platinum WEZ ZAR USD LE SP A R 6.95 R 13.00 87% R 12.30 R 5.90 $0.28 3.12x 555 $490 $459Aquarius Platinum AQP GBP USD LE SP AA £7.70 £8.50 17% £9.25 £4.11 $11.62 1.32x 257 $3,936 $3,764Platinum Australia PLA AUD USD LE SP AA A$3.08 A$3.25 6% A$3.10 A$1.45 $2.13 1.39x 207 $615 $613Anglo Platinum AMS ZAR ZAR LE U A R 1,293.00 R 1,400.00 14% R 1,480.00 R 815.01 R366.07 3.53x 237 $38,935 $38,327Northam Platinum NHM ZAR USD LE U AA R 64.00 R 77.00 21% R 79.84 R 38.00 $8.36 0.97x 238 $1,940 $1,720Average 85% 1.64x $6,323 $6,143Total $82,197 $79,853

Source: Company Reports, RBCCM EstimatesRBCCM's platinum price forecasts for 2008 and 2009 are $1,400/oz and $1,200/oz, respectively, and our LT price is $1000/oz.RBCCM's palladium price forecasts for 2008 and 2009 are $350/oz and $350/oz, respectively, and our LT price is $250/oz.(1) AMC (Adjusted Market Cap) calculated as market cap plus long-term debt less working capital

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Free CFCompany Tick CFPS P/CFPS (2) EPS P/E (2) Yield (3)

PGM Companies 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2009E 2010E '08E '09E '10E 2007 2008E 2007Eastern Platinum Limited * ELR $0.03 $0.14 $0.25 $0.43 18.3x 10.1x 5.9x ($0.02) $0.09 $0.16 $0.28 29.1x 15.6x 9.1x 10.7% 1.8% 6.4%Anooraq Resources ARQ ($0.04) ($0.03) $0.34 $0.36 n.m. 8.2x 7.8x ($0.08) ($0.09) $0.21 $0.22 n.m. 13.2x 12.8x (1.3%) (32.7%) n.mPlatmin PPN ($0.05) ($0.06) ($0.30) $1.20 n.m. n.m. 6.1x ($0.09) ($0.09) ($0.30) $0.87 n.m. n.m. 8.4x (4.2%) 6.3% n.m.Platinum Group Metals PTM ($0.06) ($0.06) ($0.07) ($0.06) n.m. n.m. n.m. ($0.10) ($0.06) ($0.07) ($0.06) n.m. n.m. n.m. (4.9%) (4.5%) n.m.Impala Platinum IMP R 19.16 R 28.88 R 35.68 R 38.83 10.3x 8.3x 7.6x R 13.12 R 23.75 R 30.05 R 33.28 12.5x 9.9x 8.9x (3.0%) 4.6% 29.7%Ridge Mining Plc RDG ($0.06) ($0.06) $0.38 $0.83 n.m. 5.7x 2.6x $0.16 ($0.06) $0.36 $0.53 n.m. 6.0x 4.1x (28.6%) (28.6%) n.mJubilee Platinum JLP ($0.04) ($0.08) ($0.03) ($0.09) n.m. n.m. n.m. ($0.04) ($0.08) ($0.04) ($0.09) n.m. n.m. n.m. (5.1%) (8.2%) n.mLonmin LMI $4.06 $5.23 $7.77 $8.55 10.9x 7.4x 6.7x $2.05 $4.13 $6.57 $7.15 13.8x 8.7x 8.0x 8.4% 5.6% 2.3%Wesizwe Platinum WEZ ($0.00) ($0.02) ($0.01) ($0.00) n.m. n.m. n.m. ($0.03) ($0.02) ($0.02) ($0.01) n.m. n.m. n.m. (2.4%) (9.2%) n.mAquarius Platinum AQP $0.83 $1.26 $2.00 $1.91 12.2x 7.7x 8.0x $0.73 $1.12 $1.82 $1.72 13.7x 8.4x 8.9x 1.7% 7.4% 22.3%Platinum Australia PLA ($0.03) $0.01 $0.38 $0.62 n.m. 7.9x 4.8x ($0.04) $0.01 $0.24 $0.51 n.m. 12.4x 5.8x (1.1%) (6.8%) n.mAnglo Platinum AMS R 61.66 R 107.45 R 126.35 R 128.67 12.0x 10.2x 10.0x R 52.41 R 83.85 R 104.23 R 107.46 15.4x 12.4x 12.0x 3.5% 4.9% 42.8%Northam Platinum NHM $0.86 $0.72 $1.11 $1.19 11.3x 7.3x 6.9x $0.78 $0.62 $0.89 $0.91 13.1x 9.1x 9.0x 9.1% 5.8% 32.8%Average 12.5x 8.1x 6.6x 16.3x 10.6x 8.7x (1.3%) (4.1%) 22.7%

Source: Company Reports, RBCCM Estimates(2) Averages exclude outliers(3) Free Cash Flow is calculated as: Operating Cash Flow - Debt Repayments - Capex* Eastern Platinum 2007 figures are for July to December

ROE

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Reserve Resource AMC/ AMC/ Resource/Company Tick Production (PGMs - 000 oz) Cash Costs (US$/oz) (P&P) (M&I) Rsrv Rsrc Reserve

PGM Companies 2007 2008E 2009E 2010E 3Y∆ 2007 2008E 2009E 2010E 3Y∆ Oz (000s) Oz (000s) (US$/oz) (US$/oz)Eastern Platinum Limited * ELR 92 92 127 258 41.1% $735 $661 $630 $567 (8.3%) 3,500 51,300 $414 $28 14.66xAnooraq Resources ARQ - 98 133 140 - - $604 $509 $442 - 5,300 44,890 $98 $12 8.47xPlatmin * PPN - - 16 149 - - - $2,062 $681 - 3,199 9,090 $259 $91 2.84xPlatinum Group Metals PTM - - - 2 - - - - $227 - - 2,715 n.m. $62 n.m.Impala Platinum IMP 3,387 3,181 3,100 3,290 (1.0%) 511 $593 $623 $590 4.9% 70,000 185,030 $325 $123 2.64xRidge Mining Plc RDG - 2 19 46 - - $435 $438 $520 - 6,405 13,385 $36 $17 2.09xJubilee Platinum ** JLP - - - - - - - - - - - - n.m. n.m. n.m.Lonmin ** LMI 1,414 1,193 1,223 1,469 1.3% $588 $767 $842 $887 14.7% 51,300 84,800 $174 $105 1.65xWesizwe Platinum ** WEZ - - - - - - - - - - - 4,800 n.m. $96 n.m.Aquarius Platinum AQP 531 523 594 606 4.5% $511 $611 $626 $615 6.4% 9,040 16,460 $416 $229 1.82xPlatinum Australia ** PLA - 62 168 - - $0 $236 $309 - 490 1,700 $1,252 $361 3.47xAnglo Platinum ** AMS 4,290 3,977 4,105 4,672 2.9% 648 $674 $644 $631 (0.9%) 195,300 285,900 $196 $134 1.46xNortham Platinum** NHM 344 321 327 354 0.9% $492 $791 $806 $801 17.6% 9,900 16,460 $43 $105 1.66xAverage 1,676 1,173 971 1,014 n.m. $614 $385 $663 $517 27,264 55,118 $321 $114 1.66xTotal 10,058 9,386 9,706 11,153 354,434 716,530

Source: Company Reports, RBCCM Estimates* Platmin figures are for the year ended January 31** Figures are for the year ended June 30

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GOLDS - Valuation Methodology and Price Target Impediments

Aflease Gold

Agnico-Eagle Mines

Alamos Gold

Anatolia Minerals

Andean Resources

AngloGold Ashanti

Aurelian Resources Inc.

Avoca Resources

Axmin Inc.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; junior average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings, we derive a price target ofR3.75/share (US$0.50/share). We rate the shares Sector Perform, Above Average Risk. Risks to our valuation include project,political, socio-economic, fiscal, mineral rights ownership, operational, commodity price, environmental regulations, financing andtrading liquidity risks. The company’s high dependency to the Modder East Project is notable; alternative sources of productionneed to be built into the mining plan as soon as possible, in our opinion.

Our C$7.50 target reflects a midpoint of 1.25x our NAV estimate and 12.5x our forward CFPS estimate. Impediments to our targetprice include fluctuations in commodity prices, greater than expected mine operating and new project construction costs andincreasing energy, material and manpower costs. In a very competitive environment, Anatolia Minerals, as with all miningcompanies, faces challenges finding and replacing mined reserves.

Our $81.00 target reflects a midpoint of 2.5x our NAV estimate and 25.0x our forward CFPS estimate. Impediments to our targetprice include fluctuations in commodity prices, greater than expected mine operating and new project construction costs andincreasing energy, material and manpower costs. Execution risk is a potential impediment in the medium term.

Our target price of C$9.00 per share is derived by applying a 1.50x multiple to our C$ NAV per share. Impediments to our targetprice being reached could include fluctuations in commodity prices and exchange rates. Furthermore, due to the increasing costs ofenergy, material and labour, greater than expected mine operating and new project construction costs could adversely affect theshare price. The fact that Alamos just began producing at commercial rate presents operational risks.

We value Andean Resources by applying a 1.0x multiple to the average of our base-case and upside valuation estimates. Our NAV for Andean is comprised of the company's two development mines (Vein Zone and Eureka Vein) and its corporate assets/liabilities. Inaddition, we ascribe value to the company's exploration upside, which we deem to be significant. Andean is exposed to a number ofrisks which could be impediments to our target price. These include; permitting risk, development risk, finance risk and sovereignrisk.

Our target price of ZAR 370/share (US$50/share) was derived from the rounded average of our NPV at the RBC metal price scenarioof US$53/share and a 15x cash flow multiple of just over US$48/share. The principle risk to this company and to our forecasts is thevery bad hedge book that continues to get deeper under water as the gold price increases. The uncertainty relating to possiblepower supply constraints in South Africa could also have a material impact on our estimates. AngloGold is under new managementwhile Anglo American is still looking to divest its remaining holding. This could cause an overhang while the company re-aligns itselfto new objectives.

Our target price of C$8.00 reflects the midpoint of fair values generated using a 1.00x P/NAV multiple and 10.0x P/CF multiple,which represent significant discounts to our target ranges for Tier II gold producers (1.5-2.5x P/NAV and 15-25x forward P/CF).Impediments to our target price include fluctuations in commodity prices, greater than expected mine operating and new projectconstruction costs and increasing energy, material and manpower costs. In a very competitive environment, Aurelian, as with allmining companies, faces challenges finding and replacing mined reserves. Our Speculative Risk (SR) qualifier reflects the lack of acompleted feasibility study, and the execution risk relating to the permitting, financing, and timely development of the Fruta DelNorte gold-silver project over the next several years.

Our target of A$2.50 is based on 1.5x our P/NPV and 10.0x F2010 CFM. Impediments to Avoca reaching our forecast earnings andprice targets include commissioning risk, lower than estimated head grade and gold production, lower realised gold prices andsinglemine exposure.

Our target price of C$1.10 reflects a multiple of 1.0x our NAV estimate. This multiple is in-line with other emerging gold producers.Impediments to our target include commodity and currency fluctuations, political and sovereign risk in the countries where thecompany operates, and increasing input costs such as energy and manpower.

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Banro Corporation

Barrick Gold

Centerra Gold

Central African Gold

Central Rand Gold

DRDGOLD

Eldorado Gold Corp.

European Goldfields

First Uranium Corp

Franco-Nevada

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings on P/cash flow, we derive a pricetarget of £1.90/share (US$3.80/share). Our price target does not take full account of the average value potential, as we deem itnecessary to discount this potential in light of the high level of uncertainty related to the execution of the company’s plan. Still, itcorrelates to a 5x P/E at our estimate for normalised long-term earnings potential. We rate the shares Outperform, Average Risk.Risks to our valuation include project risk; political, socio-economic and fiscal risk; mineral rights ownership risk; operational risk;commodity price risk and environmental regulations; as well as financing uncertainties and trading liquidity. The company's storyrests almost entirely on being able to apply a new mining method that will allow much lower mining costs. If this does notmaterialize, the company’s value would be significantly lower.

Our 12-month price target of £0.70 is derived using an NAV-based DCF model. Impediments to our target price include commodityand currency price fluctuations, development risks, operating and capital cost inflation and country risks.

Our C$10.50 target reflects a multiple of 0.85x our 2008 NAV estimate. The key price target impediments are execution of thecompany's development plans, potential capex escalations and commodity price/exchange rate forecast risks. Additionally, theshaft destressing project at Ezulwini brings with it unique operational risks. Our earnings and cash flow projections are also verysensitive to forecasted gold and uranium prices, as well as the USD/ZAR exchange rate.

Our C$9.50 target reflects a multiple of 1.0x our 2008 NAV estimate. Impediments to our target price include fluctuations incurrencies and commodity prices, greater than expected mine operating and new project construction costs and increasing energy,material and manpower costs. With properties located in Romania and Greece, the company is exposed to political and sovereignrisk. The company is also exposed to exploration and mining risks, as it may not be able to economically recover the containedresource.

Our C$24.00 target reflects a blend of 2.00x the mining component of our 2008 NAV estimate, 1.50x the oil & gas component of our2008 NAV estimate, 25x for the mining component of our 2008 CFPS estimate, and 8x the oil & gas component of our 2008 CFPSestimate. The primary impediments to our target price include commodity risk and reinvestment risk.

Our $8.50 target reflects a multiple of 2.00x our 2008 NAV estimate and 20.0x our forward CFPS estimate. Impediments to ourtarget price include fluctuations in commodity prices, greater than expected mine operating and new project construction costsand increasing energy, material and manpower costs.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings on P/cash flow, we derive a pricetarget of R12.00/share (US$1.60/share). We rate the shares Sector Perform, Speculative Risk. As for all SA –based producers, thepotential electricity supply shortage could have a material impact on DRDGOLD and our forecasts. Also, in the case of DRDGOLD inparticular, the risk exists that the new management team may feel pressured to start buying assets again. We believe such a move,before proving current operations to be sustainably profitable, could be detrimental to the share price performance.

Our target price of $48.00 reflects a multiple of 1.5x our NAV, and 15.0x our 2008 CFPS estimate. These multiples are in-line withprevious peak trading ranges for Barrick and other Tier I producers. Impediments to our target include commodity and currencyfluctuations, increasing input costs such as energy and manpower, and the challenge of sustaining its large gold reserve base.

Our target of $6.00 is derived using a 50/50 weighted average of two scenarios: Our base-case scenario reflects a Kyrgyzgovernment stake in Centerra of 40% and an 18% gross-revenue tax on Kumtor. In this scenario we apply a 1x multiple to our 2008ENAV of C$7.87/share, as well as 10x our 2008E CFPS of $1.26. Our worst case scenario models the expropriation of the Kumtor minewhere we apply a 1x multiple to our 2008E NAV of C$2.39/share. Impediments to our target include commodity and currency pricefluctuations as well as variations in our operating and capital cost assumptions. The mines are also subject to significant politicaland ownership risks and ongoing legal challenges over the issuance of the mining and exploration licenses.

Our target price of C$17.00 reflects a multiple of 1.0x our NAV estimate. This multiple is in-line with other emerging goldproducers. Impediments to our target include commodity and currency fluctuations, political and sovereign risk in the countrieswhere the company operates, and increasing input costs such as energy and manpower.

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Gabriel Resources

Goldcorp Inc.

Gold Fields

Gold Reserve Inc.

Great Basin Gold

Greystar Resources Ltd.

Harmony Gold

Highland Gold

High River Gold Mines

Our C$2.30 target reflects a multiple of 0.75x our 2008 NAV estimate. Risks in achieving our price target include delays in receivingthe EIA, and/or construction permits, delays in acquiring property and completing village relocation and political risk (given thecoalition government), and an ongoing need for the company to raise equity for working capital purposes.

Our target price of C$2.25 reflects multiples of 1.25x NAV and 12.5x forward P/CF. Impediments to our target price includefluctuations in commodity prices, greater than expected mine operating and new project construction costs and increasing energy,material and manpower costs. In a very competitive environment, High River, as with all mining companies, faces challengesfinding and replacing mined reserves.

Our target price of GBP1.80 reflects multiples of 1.50x NAV and 15.0x forward P/CF. Impediments to our target price includefluctuations in commodity prices, greater than expected mine operating and new project construction costs and increasing energy,material and manpower costs. Highland also faces political and development risk in Russia, competition from other miningcompanies, and challenges finding and replacing mined reserves.

Our target price of C$8.50 reflects the midpoint of fair values generated using a 1.00x P/NAV multiple and 10.0x P/CF multiple,which represent significant discounts to our target ranges for Tier II gold producers (1.5-2.5x P/NAV and 15-25x forward P/CF).Impediments to our target price include fluctuations in commodity prices, greater than expected mine operating and new projectconstruction costs and increasing energy, material and manpower costs. In a very competitive environment, Greystar, as with allmining companies, faces challenges finding and replacing mined reserves. Our Speculative Risk qualifier reflects the lack of acompleted feasibility study, and the execution risk relating to the financing and development of the Angostura gold-silver project.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings on P/cash flow, we derive a pricetarget of R150/share. We rate the shares Outperform, Above Average Risk. Apart from the obvious risk of large-scale disruption tooutput due to a possible electricity supply constraint in South Africa, the primary risk in the short term is the potential for non-delivery on production and cost promises made by management. Still, with so many valuation multiples indicating value, Harmonycould well be a potential corporate takeout target, in our opinion.

Our target price of $2.00 reflects the midpoint of fair values generated using a 1.00x P/NAV multiple and 10.0x P/CF multiple,which represent significant discounts to our target ranges for Tier II gold producers (1.5-2.5x P/NAV and 15-25x forward P/CF).Impediments to our target price include fluctuations in commodity prices, greater than expected mine operating and new projectconstruction costs and increasing energy, material and manpower costs. In a very competitive environment, Gold Reserve, as withall mining companies, faces challenges finding and replacing mined reserves. Our Speculative Risk (SR) qualifier reflects remainingexecution risk to complete financing and construct the Brisas gold-copper mine over the next 24-30 months.

Our target price of $50.00 reflects the midpoint of fair values generated using a 2.50x P/NAV multiple and 25.0x P/CF multiple,which represent a slight premium to Tier I / II gold producer averages. Impediments to our target price include fluctuations incommodity prices, greater than expected mine operating and new project construction costs and increasing energy, material andmanpower costs. We also consider the shares to have a degree of execution risk, relating to the start-up of new mines.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings on P/cash flow, we derive a pricetarget of C$5.00/share (US$5.10/share). We rate the shares Outperform, Average Risk. Risks to our valuation include project,political, socio-economic, fiscal, mineral rights ownership, operational, commodity price, environmental regulations, financing andtrading liquidity risks. Hollister continues to add new resources: while good news, this may delay mining commencement or causemining to be changed once the full extent of the resource becomes known.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings on P/cash flow, we derive a pricetarget of R130/share (US$17/share). We rate the shares Underperform, Average Risk.The principal impediments to our forecastsand valuations are long-term commodity prices, the ZAR/USD exchange rate, the local inflation outlook, and legislative and fiscalchanges in South Africa. A significant part of Gold Fields’ future is tied to South Deep – if it continues to underperfom, Gold Fieldscould battle to deliver improved profitability.

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IAMGOLD Corporation

International Minerals

Jaguar Mining Inc.

Kinross Gold

Lihir Gold

Mintails

Newcrest

Newmont

NovaGold Resources

Osisko Exploration Ltd.

Our target price of A$36.00 is based on 1.5x price to forward strip NPV & 15.0x CFM for FY09, Newcrest's first full year as a 100%unhedged producer. We have applied an average risk qualifier to Newcrest reflecting the quality of its asset base – long life, lowcash costs and healthy margins - and its location. The main risks to our earnings remain commissioning risk at the Telferunderground, operational risk at Telfer and in particular the grade/recovery/arsenic issue, political risk in Indonesia plus futuremetal prices and exchange rates and particularly the copper price.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings on P/cash flow, we derive a pricetarget of A$0.65/share (US$0.60/share). This does not take account of the significant upside that could be realized through phasetwo, which could bring both uranium and acid revenue on line from 2010. We rate the shares Underperform, Speculative Risk. Risksto our valuation include project, political, socio-economic, fiscal, mineral rights ownership, operational, commodity price,environmental regulations, financing and trading liquidity risks. In our opinion, share price performance will be constrained byuncertainty surrounding the company’s situation: further crystallization is required before full value can be attributed for Phase 2.

Our target price of $53.00 reflects a multiple of 1.5x our NAV, and 15.0x our 2008 CFPS estimate. These multiples are in-line withprevious trading ranges for Newmont and other Tier I producers. Risks and impediments to our target price include the challenge ofmaintaining 8.0 million ounces of annual consolidated gold production, fluctuations in commodity prices and exchange rates, as well as cost over runs and construction delays on development projects.

Our target price of $11.00 reflects the midpoint of fair values generated using a 1.3x P/NAV multiple and 12.5x P/CF multiple,which represent a slight discount to Tier I / II gold producer averages. Impediments to our target price include fluctuations incommodity prices, greater than expected mine operating and new project construction costs and increasing energy, material andmanpower costs.

Our target price of C$6.00 reflects multiples of 1.25x NAV and 12.5x forward P/CF. Impediments to our target price includefluctuations in commodity prices, greater than expected mine operating and new project construction costs and increasing energy,material and manpower costs. The company has above-average execution risk relating to the financing, timing, etc. that investorsare exposed to over the next few years as the company looks to transition into an emerging Tier II gold producer.

Our C$9.00 target is based on 1.0x our estimated NAV. Impediments to our target price include the potential for delays indevelopment, difficulty in obtaining financing and control issues with its core properties.

Our target of A$4.00 is based on a 1.50x our forward strip NAV and 16.0x CFM in 2008. Impediments to Lihir achieving our forecastearnings and price targets include lower than estimated head grades and gold production in Lienetz, lower realized gold prices,unscheduled deliveries against the hedge book, unscheduled plant breakdowns and increased country risk for Papua New Guinea.

Our target price of $27.00 reflects multiples of 1.6x NAV and 16.0x forward P/CF. Impediments to our target price includefluctuations in commodity prices, greater than expected operating and new project construction costs and increasing energy,material and manpower costs. With a key development project located in Russia (Kupol), Kinross has a degree of political riskexposure.

Our target price of C$7.75 reflects the midpoint of fair values generated using a 1.00x P/NAV multiple and 10.0x P/CF multiple,which represent significant discounts to our target ranges for Tier II gold producers (1.5-2.5x P/NAV and 15-25x forward P/CF).Impediments to our target price include fluctuations in commodity prices, greater than expected mine operating and new projectconstruction costs and increasing energy, material and manpower costs. In a very competitive environment, Osisko, as with allmining companies, faces challenges finding and replacing mined reserves. Our Speculative Risk (SR) qualifier reflects the lack of acompleted feasibility study for Malartic, and the execution risk relating to the financing and timing of a potential mine.

Our target price of C$16.00 reflects multiples of 1.50x NAV and 12.5x forward P/CF. Impediments to our target price includefluctuations in commodity prices, greater than expected mine operating and new project construction costs and increasing energy,material and manpower costs. In a very competitive environment, Jaguar, as with all mining companies, faces challenges findingand replacing mined reserves.

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Pamodzi Gold

Pan African Resources

Simmer & Jack Mines

Uruguay Mineral Expl.

Western Goldfields Inc.

Wits Gold

Yamana Gold Inc.

SILVERS - Valuation Methodology and Price Target Impediments

Coeur d'Alene Mines

As a company with no production and a very slim chance of achieving any production in the near future, Wits Gold can only bevalued on the basis of an ascribed value for the resource base. Still, given the low probability of it actually becoming a miningcompany, even this has to be heavily discounted, in our opinion. Our price target of R150/share essentially ascribes only 20% of theEV/Resource ounce potential due to a minimum of 10 years before we could potentially see any production. We rate the sharesUnderperform, Speculative Risk. Risks to our valuation include project, political, socio-economic, fiscal, mineral rights ownership,operational, commodity price, environmental regulations, financing and trading liquidity risks. In our opinion, the chances of Wits’resources being mined are both too remote and too far in the future to recommend current investment, especially given theavailability of better, more easily-valued prospects.

Our £1.25 target is based on the application of a 0.8x multiple to our NAV. The NAV is based on a DCF model of the existing goldmining operations, with no allowance for expanding the resource. The two most important impediments to our target price are thegold price and the company's ability to retain key staff.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings on P/cash flow, we derive a pricetarget of £0.15/share. We rate the shares Outperform, Speculative Risk. Risks to our valuation include project, political, socio-economic, fiscal, mineral rights ownership, operational, commodity price, environmental regulations, financing and trading liquidityrisks. Delivering sharply higher resource numbers from drilling in the Central African Republic is central: disappointing drillingresults would put downwards pressure on the share price.

Our target price of C$3.75 is a 75/25 blend of fair values generated using a P/NAV multiple of 1.25x and forward looking P/CFmultiple of 12.5x. Impediments to our target price include fluctuations in commodity prices, greater than expected mine operatingand new project construction costs and increasing energy, material and manpower costs.

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings, we derive a price target ofR14.00/share (US$1.75/share). We rate the shares Outperform, Average Risk. Electricity supply constraints could have a materialimpact on our estimates. Also, with most of Simmers’ initial gold production coming from Buffels – an old mine in a highlyseismically active mining area – this represents significant risk for unplanned production losses (as do recent moves by the SouthAfrican government to close down the entire mine when there has been a fatal accident).

Applying industry average (peer group) values of EV/resource ounce; EV/production ounce; major average implied P/E; NPV at spot,at spot less 30% and at long-term RBC prices; a P/sales ratio; and U.S. industry average ratings, we derive an average valueapproaching R60/share. We averaged NAV-at-spot and a 1x forward P/E to derive our price target of R30/share. The principalimpediments to our forecasts and valuations are long-term commodity prices, the ZAR/USD exchange rate, and the potential forelectricity supply constraints in South Africa. This is complicated further by poor liquidity and the company having inherited a verybad hedge position that will serve as a significant drag on earnings.

Our target price of $4.50 is a 75/25 blend of fair values generated using a P/NAV multiple of 1.50x and forward looking P/CFmultiple of 15.0x. Impediments to our target price include fluctuations in commodity prices, greater than expected mine operatingand new project construction costs and increasing energy, material and manpower costs.

Our $18.00 target is based on 2.1x our estimated NAV and 18.7x our forward CFPS forecast. Impediments to our target priceinclude fluctuations in commodity prices, greater than expected mine operating and new project construction costs and increasingenergy, material and manpower costs. In a very competitive environment, Yamana, as with all mining companies, faces challengesfinding and replacing mined reserves.

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Hecla Mining

Ovoca Gold

Pan American Silver

Polymetal

Silver Bear Resources

Silver Wheaton Corp.

DIAMONDS - Valuation Methodology and Price Target Impediments

African Diamonds

Firestone Diamonds

Gem Diamonds

Harry Winston Diamond

Namakwa Diamonds

Our GBP14.20 target reflects a multiple of 1.0x our 2008 NAV estimate, including a 1.15x multiple for the higher-quality Letsengasset. Risks in achieving our price target include; price risk in the diamond market, political risk in the company's areas ofoperation, particularly in Angola, the DRC and CAR, and tribal and social issues relating to its Gope mine in Botswana.

For African Diamonds, we apply a 1.0x NAV multiple to derive our price target of GBP 1.40/share. The major risk factors facingAfrican Diamonds are 1) execution risk relating to the Company's development assets, 2) political risk for its projects in the DRC andSierra Leone, and 3) operating and market risk as a high cost diamond producer.

For Ovoca, we apply a 1.0x NAV multiple to derive our price target of GBP0.17/share. Impediments to our price target includesilver and lead price fluctuations, as well as variations in our operating and capital cost assumptions, pending the completion of theBankable Feasibility Study. The company's assets are primarily located in Russia and are thus subject to further political andownership risks.

Our target price of $10.50 is a 75/25 blend of fair values generated using a P/NAV multiple of 2.00x and forward looking P/CFmultiple of 17.5x. Impediments to our price target include fluctuations in silver and gold prices, fluctuations in the Ruble exchangerate relative to the U.S. dollar, labour shortages, cost inflation, and Russian political risk

Our one-year target price of $35.00/share is based on the sum of FY 2009E EBITDA (for retail operations) and FY 2009E CFPS (forDiavik) multiple valuations using a 10.0x multiple for Harry Winston EBITDA and a 10.0x multiple for Diavik CFPS. Impediments toour price target include fluctuations in currencies and commodity prices, greater than expected mining costs and increasing energy,material and manpower costs. Additional impediments include global competition in the jewelry retail business, and the risk that aglobal economic slowdown will hamper demand for diamonds and thus negatively affect the revenue Harry Winston receives fromboth its mining and retail businesses.

Our target price of $15.00 is a 75/25 blend of fair values generated using a P/NAV multiple of 2.00x and forward looking P/CFmultiple of 20.0x. Impediments to our target price include fluctuations in commodity prices, greater than expected mine operatingand new project construction costs and increasing energy, material and manpower costs.

For Firestone, we apply a 1.0x NAV multiple to derive our price target of GBP 2.30. Impediments to our target price includedevelopment, operational, political and diamond price risks.

To arrive at our C$5.00 target for Silver Bear, we assume the company can successful outline 200MMoz of silver resources in thenext couple of years, and that the market will pay $1/oz for the resource base. Impediments to our target price includefluctuations in commodity prices, greater than expected mine operating and new project construction costs and increasing energy,material and manpower costs.

Our target price of $49.00 is a 75/25 blend of fair values generated using a P/NAV multiple of 2.5x and forward looking P/CFmultiple of 25.0x. Impediments to our target price include fluctuations in commodity prices, greater than expected mine operatingand new project construction costs and increasing energy, material and manpower costs.

We have valued Namakwa Diamonds using DCF models for its four developing mines and its beneficiation business, withexploration/development assets valued on market-related multiples. Our target price of £1.87/share is a discount to our NAV of£1.94, the discount reflecting the fact that the company is still developing its mines and beneficiation businesses. Impediments toour target price include stock market conditions, meeting budgets on expansion of the four existing mines and the beneficiationbusiness, retention of key personnel, political and diamond price risks.

Our target price of $22.00 is a 75/25 blend of fair values generated using a P/NAV multiple of 2.25x and forward looking P/CFmultiple of 22.5x. Impediments to our target price include fluctuations in commodity prices, greater than expected mine operatingand new project construction costs and increasing energy, material and manpower costs.

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Petra Diamonds

Rockwell Diamonds

Shore Gold Inc.

PLATINUMS - Valuation Methodology and Price Target Impediments

Anglo Platinum

Anooraq Resources

Aquarius Platinum

Eastern Platinum Limited

Impala Platinum Holdings

Applying industry average (peer group) values of EV/Resource ounce, EV/production ounce, Junior average implied P/E, NPV atspot, at spot less 30% and at the long-term RBC prices and a P/Sales ratio, we derive a target price of C$6.30/share. We rate theshares Outperform, Average Risk. Risks to our valuation include project risk, political, socio-economic and fiscal risk, operationalrisk, commodity price risk and environmental regulations. Substantial capital will be needed; lower metal prices could impede itsraising and result in a much lower share price.

Our target price of C$5.25 is based on a 1.0x multiple to our 2008 NAV estimate. Impediments to our price target includefluctuations in currencies and commodity prices, greater than expected mine development costs and increasing energy, materialand manpower costs.

Given the scope for corporate activity and growth potential, we are opting for a target price in line with the NPV at spot price-less-30%. We derive a target price of C$5.00/share, with an Outperform, Average Risk rating. Risks to our valuation include project risk,political, socio-economic and fiscal risk, mineral rights ownership risk, operational risk, commodity price risk and environmentalregulations; financing uncertainties and trading liquidity. The primary risks in the short term are the potential for non-delivery onproduction and cost promises made by management and the on-going electricity crisis in South Africa.

If we assume the current spot metal price will hold over the next year, Aquarius is currently trading on a one year forward P/Emultiple of just under 11x, well below the industry average multiple of some 15x. We maintain our target price of £8.50/share. Werate the shares Sector Perform, Above Average Risk. The principal impediments to our forecasts and valuations are long-termcommodity prices, the Rand/U.S. dollar exchange rate, the local inflation outlook, and legislative and fiscal changes in SouthAfrica. In Zimbabwe, security of tenure is uncertain given the political situation, although we believe the country's desperate needfor foreign exchange will prevent the situation from escalating further.

Our valuation and £1.60/share target price is based on DCF models for the produing mines and the mines which are to be broughtinto production in the next 12 months. We have not included any value for Alto Cuilo in Angola, nor for Calibrated Diamonds, thecutting business, which we believe may be sold. We have not accorded any value to the exploration portfolio in Botswana.

Being a major producer, we rate this company mainly on its earnings capacity and NPV. We derive a target price of R1400/share onthe basis of a value roughly between the NPV at spot and the price at a forward P/E of 14x. The Underperform, Average Risk ratingsare a function of the share offering the least upside potential of the three major PGM producers. Risks to our valuation includeproject, political, socio-economic, fiscal, mineral rights ownership, operational, commodity price and environmental regulationsrisks. The company’s ability to secure its New Order Mining Right is important for it to operate without constraint and to ensurethat it won’t be required to sell any additional land holdings to BEE participants at a large discount.

Being a major producer, we rate this company mainly on its earnings capacity and NPV. We derive a target price of R380/share onthe basis of a value roughly between the NPV at spot and the price at a forward P/E of 14x. The Outperform, Above Average Riskratings are a function of the share offering the best upside potential of the three major PGM producers. Risks to our valuationinclude project, political, socio-economic, fiscal, mineral rights ownership, operational, commodity price and environmentalregulations risks. It should be noted that the majority of its resource base and future growth potential is located in Zimbabwe.Given the political situation in that country, security of tenure remains uncertain.

Our target price of C$0.85 is based on a 1.15x multiple to our 2008 NAV estimate. Impediments to our price target includefluctuations in currencies and commodity prices, greater than expected mine development costs and increasing energy, materialand manpower costs.

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Jubilee Platinum

Lonmin Plc

Northam Platinum

Platinum Australia

Platinum Group Metals

Platmin

Ridge Mining Plc

Wesizwe Platinum

Our valuation matrix looks at PGM peer group averages across several metrics (including EV/resources and EV/production, P/Es atfull production and NPVs under various price scenarios). We derive a target price of C$14.00/share, in line with the average shareprice potential as calculated from our valuation matrix. We rate the shares Outperform, Average Risk. Risks to our valuation includeproject risk, political, socio-economic and fiscal risk, mineral rights ownership risk, operational risk, commodity price risk andenvironmental regulations; financing uncertainties and trading liquidity. Many of Platmin’s assets are in areas considered to havedifficult geological settings. Mine plans and feasibility studies could well turn out significantly different once mining starts.

We have opted for a target price of C$6.60/share, midway between the NPV at spot-less-30% and the NPV at RBC long-term metalprices. We rate the shares Outperform, Average Risk. Risks to our valuation include project risk, political, socio-economic and fiscalrisk, mineral rights ownership, operational risk, commodity price risk and environmental regulations, financing uncertainties andtrading liquidity. Additionally, delivering a mine at WBJV3 will be crucial in adding momentum to PTM's valuation.

Being a major producer, we rate this company mainly on its earnings capacity and NPV. We derive a target price of £38/share onthe basis of a forward P/E of 14x. The spot NPV indicates meaningful additional upside once management starts to deliver on long-term expansion promises. In line with this potential, but taking notice of the recent run of failing to meet targets, we rate theshare Sector Perform, Average Risk. Risks to our valuation include project, political, socio-economic, fiscal, mineral rightsownership, operational, commodity price and environmental regulations risks. Lonmin experienced technical difficulties with itssmelting complex in the past, leading to production losses. Although is appears that most of these issues have been addressed therisk of similar future problems remain high. Lonmin’s future production expansion is dependant on the successful implementation ofits mechanization plan. This mining method have been notorious for failing in South African mining conditions and the risk remainshigh that this approach will fail, hampering future production.

Platinum Australia's valuation is relatively full. The shares already trade above the RBC long-term metal price NPV. Given that weare already modeling some benefit from both Kalplats and Panton, we have opted for a A$3.25/share (US$3.00/share) price targetin line with the average share price potential derived from our valuation matrix. We rate the shares Sector Perform, Above AverageRisk. Risks to our valuation include project risk, political, socio-economic and fiscal risk, operational risk, commodity price risk andenvironmental regulations; financing uncertainties and trading liquidity. There could be significant downside risk if a good KalplatsBFS is not delivered.

Applying industry average (peer group) values, we calculated an average value of US$17.31/share. However, given that Sheba'sRidge is still far from production and to take into account the potential for future growth, we are opting for a target price based ona 12-month forward P/E of 12x. We derive a target price of £2.50/share. We rate the shares of Ridge Mining Outperform, with aSpeculative Risk. Risks to our valuation include project risk, political, socio-economic and fiscal risk, mineral rights ownership risk,operational risk, commodity price risk (particularly to the nickel price) and environmental regulations; financing uncertainties andtrading liquidity.

Applying industry average (peer group) values of EV/Resource ounce, EV/production ounce, junior average implied P/E, NPV atspot, at spot less 30% and at the long-term RBC prices and a P/Sales ratio, we derive a target price of R13.00/share – in line withthe average share price potential based on our valuation metrics. We rate the shares Sector Perform, Average Risk. Risks to ourvaluation include project, political, socio-economic, fiscal, operational, commodity price, environmental regulations, financing andtrading liquidity risks. Further project acquisitions are required to unlock more value, creating the risk of potentially over-payingfor future growth.

Applying a range of industry (peer group) values, we derived an average value of US$9.02/share and a spot metal price NPV value ofUS$7.88/share. However, given the risks associated with the Tjate project, we are opting for a more conservative target price of£2.10/share, which is in line with the NPV at spot-less-30%. This is still significantly below the average share price potential ascalculated from our valuation matrix. We rate the shares Outperform, Speculative Risk. Risks to our valuation include project risk,political, socio-economic and fiscal risk, mineral rights ownership risk, operational risk, commodity price risk and environmentalregulations; financing uncertainties and trading liquidity. In the case of Jubilee’s projects in particular, an added risk is theexpected long lead time to delivery.

Applying a 12 month forward P/E , we derive a price target of R77.00/share. We rate the shares Underperform, Above AverageRisk. Risks to our valuation include project risk, political, socio-economic and fiscal risk, operational risk, commodity price risk andenvironmental regulations, financing uncertainties, trading liquidity and dependence on the Northam Mine until Booysendal startsoperations. Given recent moves by the SA government to close down the entire mine when there has been a fatal accident and thehigh cost of production at Northam, this dependency could add significant risk.

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For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three ratingcategories - Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratingsof Top Pick/Outperform, Sector Perform and Underperform most closely correspond to Buy, Hold/Neutral and Sell,respectively, the meanings are not the same because our ratings are determined on a relative basis (as described above).

Distribution of Ratings/IB ServicesRBC Capital Markets

Investment BankingServ./Past 12 Mos.

Rating Count Percent Count Percent

BUY[TP/O] 532 47.25 197 37.03HOLD[SP] 511 45.38 118 23.09SELL[U] 83 7.37 21 25.30

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Important Disclosures

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The analyst(s) responsible for preparing this research report received compensation that is based upon various factors,including total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or havebeen generated by investment banking activities of the member companies of RBC Capital Markets and its affiliates.

Additional DisclosuresRBC Capital Markets is the business name used by certain subsidiaries of Royal Bank of Canada, including RBC Dominion Securities Inc., RBC CapitalMarkets Corporation, Royal Bank of Canada Europe Limited and Royal Bank of Canada - Sydney Branch. The information contained in this report has beencompiled by RBC Capital Markets from sources believed to be reliable, but no representation or warranty, express or implied, is made by Royal Bank ofCanada, RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in thisreport constitute RBC Capital Markets' judgement as of the date of this report, are subject to change without notice and are provided in good faith but withoutlegal responsibility. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared forgeneral circulation to clients and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Theinvestments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if youare in doubt about the suitability of such investments or services. This report is not an offer to sell or a solicitation of an offer to buy any securities. Pastperformance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. RBC Capital Markets researchanalyst compensation is based in part on the overall profitability of RBC Capital Markets, which includes profits attributable to investment banking revenues.Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and otherinvestment products which may be offered to their residents, as well as the process for doing so. As a result, the securities discussed in this report may not beeligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as securities broker or dealerin 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. To the fullextent permitted by law neither RBC Capital Markets nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct orconsequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copiedby any means without the prior consent of RBC Capital Markets.

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INDUSTRY | COMMENTMAY 8, 2008

Precious Metals & Minerals

Diamond fundamentals positive; but short-termconsumer spending squeeze is a threat

Industry outlook Positive - but some hurdles

• While the threat of recession in the US suggests the upward move indiamonds prices could be under threat, the long-term prognosis is good withsupply of rough gems likely to fall short of forecast demand.

• The major beneficiaries of a forecast shortage of rough diamonds for thejewelery trade will be producers of better quality and large gems. Here,prices are likely to rise at well above inflation rates simply because thestones are in very short supply.

• Investors are placing a premium on those companies which have currentproduction over explorers. The result is that companies looking to fundexploration campaigns will find fund raising difficult and expensive in theshort term, in our view, until risk aversion among investors dies down. Thisis likely to encourage increasing consolidation in the junior diamond sector.

• As explorers move their projects up the development curve, multiples ofin-situ value should expand significantly, offering superior returns to theperformance of producing companies' shares.

• Increasingly, producers are moving downstream to capture additionalmargins in the cutting and polishing of diamonds. In our view, the areawhich offers the greatest potential to capture additional margin is in betterquality rough diamonds of the type produced by some of the junior minerslisted in London and Canada, such as Gem Diamonds, Petra Diamonds,Namakwa Diamonds and Rockwell Diamonds.

• Government intervention, be it in the form of higher taxes and royalties,increased ownership, or pressure to beneficiate in the host country, isincreasing. All listed companies will have to adapt to this.

Priced as of prior trading day's market close, EST (unless otherwise noted).All values in USD unless otherwise noted.

Royal Bank of Canada Europe Limited

Des Kilalea (Analyst)(+44) 207 653-4538; [email protected]

For Required Disclosures, please see Page 13.

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Summary As the diamond sector moves towards the second half of 2008, prospects appear to be improving, though the immediate future is still littered with pitfalls for explorers and producers. Prices remain firm, even strengthening, but this may not translate into increased profits as costs come under increasing pressure, and, ahead of the busy year-end period forecasts for demand are risky. Ultimately, diamonds, as a luxury consumer purchase, cannot escape the pressure on consumer spending.

In the face of difficult capital market conditions and increasing costs of exploration, we expect consolidation in the junior diamond mining sector to continue. Juniors will find it increasingly expensive to raise the funds needed to maintain their exploration and drilling campaigns and this could lead to another round of mergers in the year ahead which would improve the liquidity in the investible universe.

The major trends impact the diamond sector at present are:

Diamond price strength continues: While the world economy lumbers through one of its worst periods in modern history, with central banks reducing interest rates to stave off recession, diamond prices have been surprisingly firm. Three weeks ago De Beers, the largest producer of diamonds ($6bn of a world supply of some $13bn), disclosed that its rough prices in the first four months of 2008 had increased 8.5%; this in a period when world economic growth is slowing markedly and consumer confidence has been severely dented.

Exhibit 1: De Beers’ share of world production

Alrosa

21% De Beers

46%

Aber

3%Other

18%

Rio Tinto

8%

Billiton

4%

Source: Company records

De Beers is the supplier of the “average” rough diamond, diamonds which sell for mean price of around $90/ct. The average hides some important deviations; at the top end of the rough diamond market prices have been significantly stronger. Rockwell Diamonds, which mines high-quality gem diamonds in the Middle Orange River (MOR) of South Africa has seen realised prices increase much faster than 8.5% (see Exhibit 2). While Rockwell’s monthly tender results have been volatile, the trend in prices is strongly positive. In the first quarter of the 2008 Rockwell has realised 25% more for its diamonds than in the same period of 2007.

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Exhibit 2: Rockwell Diamonds tenders prices ($/ct)

Rockwell Tender prices ($/ct)

0

500

1000

1500

2000

2500

3000

Apri

l

May

June

July

Aug

Sept

embe

r

Oct

Nov

embe

r

Janu

ary

Feb

Mar

2007 2008

Tender prices ($/ct)

Trend

Source: Company records

Likewise Gem Diamonds, which owns and operates the Letseng mine in Lesotho, the world’s highest $/carat producer, reports price increases of 15%-30% at its three producing mines over the past 12 months. Letseng realised a price increase 8% in Q1 to $2,503/ct after a strong rise from $1,602/ct in calendar year 2006 to $2,201/ct in 2007. Gem also reported strength in higher prices at its Australian Ellendale mine and the Cempaka alluvial operations in Indonesia.

Namakwa Diamonds (which listed after a $185m IPO in London in November) also reported a surge in rough diamond prices for its South African alluvial production. Ahead of listing on London’s main board, Namakwa’s modelled grade in its pre-listing document was $638/ct whereas sales in the six months to end-February 2008 averaged $700/ct. Another producer which has reported strong prices is Petra Diamonds, with prices for its Koffiefontein underground mine averaging more than $400/ct compared with expectations a year ago of under $300/ct.

Exhibit 3: Value of Diamonds in Jewellery at polished wholesale prices ($17 Billion)

Asia

16%

Japan

9%

Europe

16%

Other

12%

USA

47%

Source: De Beers

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These higher prices tend to fly in the face of weaker retail conditions in the world’s largest diamond jewellery market, the US, which accounts for nearly half by value of all diamonds sold in jewellery. Consumer spending is correlated to disposable income and consumer confidence; both of which are falling. The Conference Board Consumer Confidence Index, one of the most widely-watched indices of consumer sentiment in the US, fell from 65.9 to 62.3 points in April, the fourth consecutive monthly decline and the eighth in the past nine months. The index is now at its lowest level since end-March 2003. The Board commented at the release of the April data on April 29: “This continued weakness suggests that not only has the feeble level of growth in Q1 spilled over into Q2, but that economic conditions may have slowed even further… Looking ahead consumers’ outlook for the economy, the job market and their income prospects remains quite pessimistic and little changed from last month.”.

Exhibit 4: Conference Board Consumer Confidence Index

55

65

75

85

95

105

115

Jan-

06

Mar

-06

May

-06

Jul-

06

Sep-

06

Nov

-06

Jan-

07

Mar

-07

May

-07

Jul-

07

Sep-

07

Nov

-07

Jan-

08

Mar

-08

Index

Source: Conference Board

Evidence of slower demand also comes in the form of a 7.3% fall in comparable sales in the second quarter to January 31 2008 from specialty diamond retailer Zale Corporation (reported 7 February 2008), in part due to the timing of a Valentine Day promotion. Upmarket jewellery retailer Tiffany also reported slowing activity with Q4 turnover up only 1% on a global basis on a comparable store basis.

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Exhibit 5: Rough and Polished price indices

Source: WWW International Diamond Consultants (2008 to 2012 are forecasts)

The weaker dollar may be contributing to the strength in prices. In the face of a falling dollar, rough prices are increasing. This encourages cutters and polishers to pay up for rough, in particular rough that is short supply, such as better qualities above 2ct in good colours. While prices of scarce better-quality and larger rough diamonds are likely to be less impacted by slowing consumer spending, the ability of rough prices in general to remain on a rising trend will likely be tested if demand for polished diamonds used in jewellery does not pick up. There is a prospect, therefore, for rough prices to move down and more into line with the trend in polished prices (see Exhibit 5), but to continue moving higher in the medium-term.

Exhibit 6: Demand for diamonds in different categories ($bn)

Source: WWW International Diamond Consultants (2008 to 2012 are forecasts)

The belief in a strong price trend beyond the near-term is based on slow growth in supply (see section below titled “Supply Shortages still appear likely”) and growth in demand in emerging economies, as well as the recovery which will come when the US moves through its current period of economic weakness. The chart in Exhibit 7 shows forecast trends in GDP growth in some of the emerging economies with a projection of strong advances in the BRIC countries (Brazil, India and China). Emerging demand for diamond jewellery in these economies as well as in the Gulf states should underpin growth in diamond offtake.

Rough and Polished PricesJan 2003=100

90.0

100.0

110.0

120.0

130.0

140.0

150.0

160.0

170.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

WWW Overall RoughIndexPolishedPrices OverallIndex

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Exhibit 7: GDP growth forecast (% per year)

Source: Economist Intelligence Unit forecast for 2010 (August 2007)

Supply shortages still appear likely: Looking beyond the next six to 12 months when we believe economic growth and consumer confidence will be tested by the prospect of increasing unemployment, higher inflation, squeezed disposable incomes and weak property prices, prices of rough diamonds appear likely to remain firm largely because supply is not increasing as fast as forecast demand.

Exhibit 8: Supply of rough diamonds can’t keep up with forecast demand

Source: WWW International Diamond Consultants (2008-2016 are forecasts from February 2008)

Finding economic kimberlites is difficult with less than 1% of all ore bodies discovered being brought into production. In addition, the time taken from the discovery of a kimberlite to the commencement of production is usually in excess of seven years; and in countries such as Angola and Canada, given weather, overburden, environmental impact and bureaucracy (in Angola), the interval can be even longer.

Thus, on the supply side, the picture is relatively clear in our view; the only significant new mines coming into production in the next five years are De Beers’ Snap Lake and Victor operations in Canada and the AK6 kimberlite in Botswana. Snap Lake and Victor will add some 2m carats valued at some $500m to world supply, while AK6’s production should be around 900,000ct valued at $145m by 2012.

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Exhibit 9: Value of rough diamond supply and forecasts ($bn/year)

Source: WWW International Diamond Consultants (2008-2016 are forecasts)

In a global supply of $13-$14bn, this is not a great deal, particularly as Diavik, Ekati, Argyle, Venetia and some of De Beers’ older mines will be slowing. Indeed, a hiccup in the output of Orapa, Venetia, Diavik and Ekati would more than offset this addition output. Besides these mines are not yet in production but output at Diavik (60/40 Rio Tinto/Harry Winston), Argyle (Rio Tinto) and Ekati (BHP Billiton 80%) has been under some pressure. In the quarter to end-March, at 1.1m carats Diavik’s output was down 31% over Q1 2007 due to extreme weather and lower grade, while rain and a slump in the main pit access resulted in a 37% drop in Argyle’s production to 2.1m carats. Together these resulted, we estimate, in a fall in diamond supply of some $70m.

Beyond these mines, the next major additions to supply would probably come from De Beers’ existing mines in Botswana where expansions are planned for Orapa and Jwaneng. In addition, De Beers and LukOil are examining a new mine on the Grib pipe in north-east Russia, but that will not become a reality until 2015/2015 at the earliest. The other hoped-for addition to production, the Alto Cuilo kimberlite field in Angola, looks like being far slower than hoped. Hence the flat profile of forecast production in the WWW International chart in Exhibit 9.

South African Power shortages

Chronic shortages of power in southern Africa are also expected to contribute to slow growth in supply or even a decline in output in the short term. Southern Africa accounts for nearly 40% of all new-mined diamonds in value terms, with the world’s largest mines being in Botswana (Jwaneng and Orapa) and South Africa (Venetia). The interruptions are not isolated to South Africa; virtually all of Botswana’s power comes from the South African grid, as does the energy consumed in neighbouring diamond producers Namibia and Lesotho. Unstable electricity supply in Southern Africa is likely to last for the next seven years, at least, and is expected to result in lower output and higher costs.

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Exhibit 10: Value of rough diamond supply and forecasts ($bn/year)

South Africa, 11%

Canada, 12%

Russia, 21%

Angola, 9%

Botswana, 27%

Other, 20%

Production value 2006

Source: Company reports and Kimberley Process reports (2007)

Evidence of the damage to diamond supply from South Africa’s unstable power supply came in the De Beers’ annual financial statement for 2007 and the recent interim report from Namakwa Diamonds. In the six months to end-February Namakwa reported that it had lost 45 days production at its developing mines in the North West province of South Africa because of heavy rains and power outages. In addition, Namakwa warned that there would be a delay in building production to a peak of 126,000ct/year by FY09 because Eskom, the state electricity utility, may not be able to supply sufficient electrical power to run the six dense medium separation units required to expand production.

Fellow alluvial producer Rockwell Diamonds also warned of a slower production build-up and higher costs as a result of intermittent power and the need to used diesel-generated power to runs its operations. Rockwell has ordered four diesel generators capable of supplying 100% of power needs. On the basis that it will require to use diesel-generated power 20% of the time, Rockwell estimates unit costs could rise some 10%, highlighting the impact of the interruptions cause by Eskom’s load shedding.

Currency impacts on costs and margins Stronger and volatile currencies of producing countries are also playing a part in restraining the pace at which supply builds. Diamonds are sold in US dollars, but a large component of mining cost is incurred in local currencies in Botswana, South Africa, Canada and Australia. While higher diamond prices have tended to offset some cost increases brought about by strong domestic currencies, in many cases operating cost increases driven by higher input costs and stronger currencies have narrowed profit margins. This could put some projects at risk, particularly in countries, such as Canada, where operating costs are already high. De Beers’ decision in 2007 to write-down one third of its investment so far in three developing mines in small part reflected the impact of a stronger Canadian dollar.

Cutting centre debt For some years the level of bank debt in cutting centres has been a worry to some of the diamond bankers, simply because so much of the borrowings fund not only the conversion of rough into polished, but also a burgeoning level of receivables. It is likely that debt levels will again become a subject of concern because high prices for rough will mean more reliance on bank debt. That polished prices have not been as strong as rough will also lead to increased focus on the balance sheets of the cutters and polishers, particularly in the face of slowing demand for jewellery in the world’s major markets.

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Exhibit 11: Cutting centre bank debt ($m)

0

2000

4000

6000

8000

10000

12000

14000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

USA

Series3

India

Israel

Sm

Source: RBC Capital Market estimates

Government intervention, new taxes and royalties Increasing government intervention in mining, through increased shareholdings, higher taxes and royalties is becoming more common. This could impact the pace at which diamond supply increases. The major changes to legislation as it affects diamond producers is in Southern Africa where host countries now insist on local beneficiation, with the penalty being increased taxes and royalties.

South Africa is not only proposing a royalty on mining company sales (planned from 2009 but still in discussion), but has also imposed a 5% duty on rough diamonds which are not beneficiated in the country. In addition, the government has created a State Diamond Trader which has the right to buy 10% of the run-of-mine production of all diamond producers which will be made available to local cutters. For De Beers, the changes have seen a major investment in a sorting facility in the Botswana capital Gaborone where all of the company’s global production will be sorted for its sights.

In Angola, the impact of State involvement is more direct with an initial requirement that State company Endiama owns up to 50% of any new project, with local partners owning some 25%.Thus exploration and development companies are often in a position where they have to fund up to 75% of exploration and feasibility costs up to the bankable level. On top of this, all diamonds produced have to be sold to Endiama at what, most believe, is a discount to fair market value. In addition, a 5% royalty is payable on diamond sales value, with a further 2.5% valuation tax and a 1% industrial tax. These imposts and a small shareholding will likely dissuade a rapid build-up of production from Angola.

In other countries, such as the Central African Republic, the government generally insists on a 10% free-carried interest. If developing gold producer Axmin’s recent CAR experience is anything to go by, government may opt instead for a cash payment instead of the 10% interest which will place immediate cash flow pressure on junior miners.

Botswana, the world’s largest producer of diamonds, allows for government ownership of up to 50% in any new diamond project, with the government buying its share, probably at the cost of exploration and development. However, not all new mines will see government ownership. In the case of DiamonEx, government elected not to take up any shares in the project, opting instead for a variable tax rate and royalty regime. It is generally assumed that government would limit its ownership to no more than 25% of any new project unless the mines were to be extremely large and able to support high margins. This is the case in the Jwaneng mine owned jointly with De Beers where the margin is in excess of 85%. The next mine to negotiate a tax and ownership regime is the AK6 mine which is being developed by De Beers in JV with African Diamonds.

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Diamond miners moving downstream into processing A growing trend among the companies with rough diamond production is the desire to capture more of the margin between the mine gate and the selling of polished diamonds to the jewellery manufacturing sector. In Exhibit 13 we reproduce a diagram from the Namakwa IPO document showing the uplift in value from £13,1bn of rough diamonds sold at the mine gate to $18.5bn sold as polished diamonds into the jewellery sector. The major margins are in mining (57%) and cutting and polishing (24%), with dealers reaping a smaller (6%) on sales.

Exhibit 12: The Diamond Value Chain

Source: Namakwa Diamonds pre-IPO documents (December 2007)

The margins in cutting are an average and mask the large potential uplift which comes from selecting specific stones in strong demand and cutting them. Here margins may be in excess of than 100%. This is why Gem Diamonds, Petra Diamonds, Namakwa Diamonds and Rockwell are moving more into the downstream part of the diamond pipeline.

Each of these companies has a different strategy, at present. But each is similar in that the rough diamonds it wishes to beneficiate are higher-priced, better quality stones where the margins available in cutting and polishing are greater than industry averages. Namakwa is the only listed company – perhaps the only company – which is moving backwards into mining from a diamond dealing and processing platform. The company was founded as a dealing and cutting/polishing operation in South Africa and is now developing alluvial mines in South Africa, as well as funding exploration projects in the DRC, Angola and Namibia.

In Petra’s case, a toe was put in the water of beneficiation through the purchase of Calibrated Diamonds, a high-technology cutting process which is capable of turning out identical polished diamonds to order. It is still moot whether the process is commercial in Petra’s hands, but the company remains committed to looking at ways to add value to its high-priced output.

Rockwell and Gem have a similar strategy at this stage, though Gem’s strategy appears to aim to move more into the downstream space than Rockwell. Both companies have been selecting stones from their high-priced production for value adding and both report significantly higher margins on the gems processed. Rockwell sells selected rough to the Steinmetz group which cuts and polishes the diamonds and shares the beneficiation margin with Rockwell. Gem has been testing the margins in a similar way to Rockwell, but management appears determined to gain more control of the value-adding process.

A totally different strategy is followed by Harry Winston. This company owns the upmarket Harry Winston diamond jewellery retail chain and also owns 40% of the Diavik diamond mine in Canada’s North West Territories. In what CEO Bob Gannicott calls a “book end” strategy, the company captures the mining margin on the Diavik goods by careful sorting into parcels suitable for cutting and polishing client needs, while looking to capture the retail margin through one of the world’s major jewellery brands. The synergy in this strategy comes from market intelligence and an ability to sort the Diavik goods into parcels which reap good prices.

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Tough capital raising environment points to more consolidation Risk aversion by investors is making it more difficult for junior miners to raise new capital, particularly companies such as diamond explorers where proving up deposits is time consuming. The result of risk aversion has been a widening of the discount at which some of the explorers are trading in relation to their producing counterparts.

Exhibit 13: Valuation of listed diamond companies

Company DescriptionMarket

cap ($m)Carats

(MM) $/carat

In-situ value ($m)

Curr. EV ($m)

Curr. EV/ct ($)

Curr. EV/In -situ (%)

Alluvial companies

Pangea Alluvial - explorer 135 10.8 170 1836 120 11.2 6.6

Namakwa Alluvial - developing producer 389 17.3 259 4464 250 14.5 5.6

BRC DiamondCore Kimberlite/alluvial Developer/explorer 37 1.2 408 490 39 32.5 8.0

Trans Hex Alluvial - producer 129 2.4 670 1578 115 48.8 7.3

Rockwell Alluvial - producer 106 0.5 1500 820 102 186.9 12.5

Average Alluvial 8.0

Kimberlite companies

Kopane Kimberlite - developing producer 23 11.5 65 748 19 1.7 2.6

Archangel Kimberlite evaluation 126 36.3 110 3989 126 3.5 3.2

DiamondCorp Tailings/Kimberlite 57 14.1 125 1763 57 4.0 3.2

Shore Gold1Kimberlite - developing producer 720 72.0 136 9764 630 8.8 6.5

Stornoway2Kimberlite explorer 91 9.6 95 914 97 10.1 10.6

Gem Kimberlite - producer 1366 30.7 350 10745 1182 38.5 11.0

Firestone3Kimberlite evaluation 194 8.9 160 1421 184 20.8 13.0

Mountain Province4Kimberlite evaluation 285 22.8 83 1892 283 12.4 15.0

Petra Kimberlite/fissure producer 383 9.3 161 1500 346 37.1 23.1

African Diamonds Kimberlite - close to production 117 3.2 150 475 120 38.1 25.4

Harry Winston5Kimberlite producer 1771 41.9 84 3521 1869 44.6 53.1

Petra 6Kimberlite producer 383 32.4 114 3692 346 10.7 9.4

Average Kimberlite 15.1

Notes

1. Resource and price at RBC Capital Markets estimates 5. Excludes Harry Winston chain at RBC Capital Markets' valuation

2. Assumes only 50% of Renard 6. Includes Kimberley (74%) and Cullinan (37%) ex C-Cut

3. Includes 80% of BK11 - excludes Tsabong * Currency of research report

4. Owns 49% of Gahcho Kue

Source: Company reports and RBC Capital Markets estimates (prices from Bloomberg on May 5 2008)

In Exhibit 13 we show the Enterprise Value/In-situ Value of the major listed diamonds companies. The first point to note from this table is that alluvial diamond companies trade at a lower multiple on average than kimberlite companies; an average EV/In-situ Value of 8.0% compared with 15.1% for kimberlite operators. The second point is that producers, both alluvial and kimberlite mines, trade at significantly higher multiples than explorers or developers.

In our view, the message from the diversion in value between the explorers and the producers is that fund raising for the juniors is becoming more expensive. This could lead to further consolidation in the junior diamond sector as cash-hungry explorers are merged with cash-generating producers. If this happens it could improve the investible nature of the diamond sector in world stock markets.

Investment Conclusion Diamond jewellery purchases are funded from consumer disposable income. Thus, in the short-term, diamond prices are likely to see some downward pressure, particularly in average or cheaper qualities of rough, simply because consumer demand remains under pressure. Better qualities are likely to feel less pressure, but even these diamonds would not be totally immune to recession and weaker capital markets. Nevertheless, in our view companies producing rough in the better end of the market are likely to be far more defensive than those producing cheaper goods or those which are pure exploration plays.

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We believe medium to long-term prospects for the diamond sector, however, remain bright. Supplies of rough diamonds across most categories are likely to be restrained and when world economies recover, rough prices should resume their upward moves. Even at the cheaper end prices may see strength given the reduced output from Rio Tinto’s Argyle mine as it moves underground.

In uncertain markets, where investors are more risk averse, investment focus is more likely to be on producing rather than exploration and development companies. But in our view, the real value will be created as companies move their projects up the development curve and share prices begin to capture the higher multiples attributed to producers. For now, though, investors appear not to be prepared to pay for this risk.

Companies mentioned:

Gem Diamonds (LSE: GEMD; 1130GBp; Sector Perform, Average Risk)

Petra Diamonds (LSE: PDL; 110GBp; Outperform, Speculative Risk)

Namakwa Diamonds (LSE: NAD; 167GBp; Sector Perform, Speculative Risk)

Rockwell Diamonds (TSX: RDI; C$0.47; Outperform, Above Average Risk)

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Required Disclosures

Explanation of RBC Capital Markets Rating System

An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned toa particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the analyst'ssector average.RatingsTop Pick (TP): Represents best in Outperform category; analyst's best ideas; expected to significantly outperform the sector over 12months; provides best risk-reward ratio; approximately 10% of analyst's recommendations.Outperform (O): Expected to materially outperform sector average over 12 months.Sector Perform (SP): Returns expected to be in line with sector average over 12 months.Underperform (U): Returns expected to be materially below sector average over 12 months.Risk Qualifiers (any of the following criteria may be present):Average Risk (Avg): Volatility and risk expected to be comparable to sector; average revenue and earnings predictability; nosignificant cash flow/financing concerns over coming 12-24 months; fairly liquid.Above Average Risk (AA): Volatility and risk expected to be above sector; below average revenue and earnings predictability; maynot be suitable for a significant class of individual equity investors; may have negative cash flow; low market cap or float.Speculative (Spec): Risk consistent with venture capital; low public float; potential balance sheet concerns; risk of being delisted.

Distribution of Ratings, Firmwide

For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories - Buy,Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick/Outperform,Sector Perform and Underperform most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the samebecause our ratings are determined on a relative basis (as described above).

Distribution of Ratings/IB ServicesRBC Capital Markets

Investment BankingServ./Past 12 Mos.

Rating Count Percent Count Percent

BUY[TP/O] 507 46.34 195 38.46HOLD[SP] 493 45.06 122 24.75SELL[U] 94 8.59 19 20.21

Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1700

800

900

1,000

1,100

1,200

2006 2007 2008

07/30/07I:SP:1220

Rating and Price Target History for: Gem Diamonds Limited as of 05-07-2008 (in GBp)

Legend:

TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage; NR: Not Rated;

NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date a security was

removed from a recommended list.

Created by BlueMatrix

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Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q130

60

90

120

150

180

2006 2007 2008

01/23/07I:OP:185

03/07/07OP:195

04/15/08OP:160

Rating and Price Target History for: Petra Diamonds Ltd. as of 05-07-2008 (in GBp)

Legend:

TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage; NR: Not Rated;

NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date a security was

removed from a recommended list.

Created by BlueMatrix

Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q175

100

125

150

175

200

2006 2007 2008

01/28/08I:OP:185

04/25/08SP:187

Rating and Price Target History for: Namakwa Diamonds Ltd. as of 05-07-2008 (in GBp)

Legend:

TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage; NR: Not Rated;

NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date a security was

removed from a recommended list.

Created by BlueMatrix

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Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q10

0.2

0.4

0.6

0.8

1

2006 2007 2008

08/09/07I:OP:1

Rating and Price Target History for: Rockwell Diamonds Inc. as of 05-07-2008 (in CAD)

Legend:

TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage; NR: Not Rated;

NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date a security was

removed from a recommended list.

Created by BlueMatrix

References to a Recommended List in the recommendation history chart may include one or more recommended lists or modelportfolios maintained by a member company of RBC Capital Markets or one of its affiliates. RBC Dain Rauscher Inc. RecommendedLists include a former list called the Western Region Focus List (1), a former list called Model Utility Portfolio (2), and the PrimeOpportunity List (3) (formerly called the Private Client Selects), Private Client Prime Portfolio (4), a former list called Private ClientPortfolio (5), the Prime Income List (6), the Guided Portfolio: Large Cap (7), and the Guided Portfolio: Dividend Growth (8). Theabbreviation 'RL On' means the date a security was placed on a Recommended List. The abbreviation 'RL Off' means the date asecurity was removed from a Recommended List.

Analyst Certification

All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of thesubject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly orindirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.

Dissemination of Research

RBC Capital Markets endeavours to make all reasonable efforts to provide research simultaneously to all eligible clients, havingregard to local time zones in overseas jurisdictions. RBC Capital Markets' research is posted to our proprietary websites to ensureeligible clients receive coverage initiations and changes in rating, targets and opinions in a timely manner. Additional distribution maybe done by the sales personnel via email, fax or regular mail. Clients may also receive our research via third party vendors. Pleasecontact your investment advisor or institutional salesperson for more information regarding RBC Capital Markets research.RBC Capital Markets also provides eligible clients with access to a database which may contain Short-Term trading calls on certain ofthe subject companies for which it currently provides equity research coverage. The database may be accessed via the followinghyperlink https://www2.rbccm.com/cmonline/index.html. The information regarding Short-Term trading calls accessible through thedatabase does not constitute a research report. These Short-Term trading calls are not formal ratings and reflect the research analyst'sviews with respect to market and trading events in the coming days or weeks and, as such, may differ from the price targets andrecommendations in our published research reports reflecting the research analyst's views of the longer-term (one year) prospects ofthe subject company. Thus, it is possible that a subject company's common equity that is considered a long-term 'sector perform' oreven an 'underperform' might be a Short-Term buying opportunity as a result of temporary selling pressure in the market; conversely,a subject company's common equity rated a long-term 'outperform' could be considered susceptible to a Short-Term downward pricecorrection.

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RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. Toaccess our current policy, clients should refer tohttp://www.rbccm.com/cm/file/0,,63022,00.pdfor send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower,Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

Important Disclosures

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The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including totalrevenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated byinvestment banking activities of the member companies of RBC Capital Markets and its affiliates.

An analyst involved in the preparation of this report has visited certain material operations of Gem Diamonds Limited.

An analyst involved in the preparation of this report has visited certain material operations of Petra Diamonds Ltd.

An analyst involved in the preparation of this report has visited certain material operations of Namakwa Diamonds Ltd.

A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities forNamakwa Diamonds Ltd. in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking servicesfrom Namakwa Diamonds Ltd. in the past 12 months.

RBC Capital Markets has provided Namakwa Diamonds Ltd. with investment banking services in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities forRockwell Diamonds Inc. in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking servicesfrom Rockwell Diamonds Inc. in the past 12 months.

RBC Capital Markets has provided Rockwell Diamonds Inc. with investment banking services in the past 12 months.

Additional Disclosures

RBC Capital Markets is the business name used by certain subsidiaries of Royal Bank of Canada, including RBC Dominion Securities Inc., RBC Capital MarketsCorporation, Royal Bank of Canada Europe Limited and Royal Bank of Canada - Sydney Branch. The information contained in this report has been compiled by RBCCapital Markets from sources believed to be reliable, but no representation or warranty, express or implied, is made by Royal Bank of Canada, RBC Capital Markets, itsaffiliates or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in this report constitute RBC Capital Markets'judgement as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Nothing in this reportconstitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared for general circulation to clients and has been preparedwithout regard to the individual financial circumstances and objectives of persons who receive it. The investments or services contained in this report may not besuitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. Thisreport is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed,and a loss of original capital may occur. RBC Capital Markets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, whichincludes profits attributable to investment banking revenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own lawsregulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, the securitiesdiscussed 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 assecurities 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 thatjurisdiction. To the full extent permitted by law neither RBC Capital Markets nor any of its affiliates, nor any other person, accepts any liability whatsoever for anydirect or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copiedby any means without the prior consent of RBC Capital Markets.

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To U.S. Residents:This publication has been approved by RBC Capital Markets Corporation, which is a U.S. registered broker-dealer and which accepts responsibility for this report andits dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting in a broker or dealer capacity and thatwishes further information regarding, or to effect any transaction in, any of the securities discussed in this report, should contact and place orders with RBC CapitalMarkets Corporation.To Canadian Residents:This publication has been approved by RBC Dominion Securities Inc. Any Canadian recipient of this report that is not a Designated Institution in Ontario, anAccredited Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) and that wishesfurther information regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBC DominionSecurities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.To U.K. Residents:This publication has been approved by Royal Bank of Canada Europe Limited ('RBCEL') which is authorized and regulated by Financial Services Authority ('FSA'), inconnection with its distribution in the United Kingdom. This material is not for distribution in the United Kingdom to private customers, as defined under the rules ofthe FSA. RBCEL accepts responsibility for this report and its dissemination in the United Kingdom.To Persons Receiving This Advice in Australia:This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been preparedfor general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting onthis material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisition orpossible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product andconsider that document before making any decision about whether to acquire the product.To Hong Kong Residents:This publication is distributed in Hong Kong by RBC Investment Services (Asia) Limited, a licensed corporation under the Securities and Futures Ordinance. Thismaterial has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of any recipient. Hong Kong persons

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wishing to obtain further information on any of the securities mentioned in this publication should contact RBC Investment Services (Asia) Limited at 17/Floor, CheungKong Center, 2 Queen's Road Central, Hong Kong (telephone number is 2848-1388).

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Find CIBC research on Bloomberg, Reuters, firstcall.com CIBC World Markets Corp., 300 Madison Avenue, New York, NY 10017-6204 (212) 667-7000 (800) 999-6726and cibcwm.com CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, BCE Place, Toronto, Canada M5J 2S8 (416) 594-7000

Equity ResearchDropping Coverage

March 16, 2008 Precious Metals

Dropping Coverage

� As of March 16, we are dropping coverage of Anatolia Minerals Development Ltd., Coeur d'Alene Mines Corp., Golden Star Resources Ltd., Minco Silver Corporation, and Silvercorp Metals Inc.

� The decision is unrelated to any awareness on our part of a change in the fundamental condition of the firms. Rather, our decision stems from an analyst departure. Were we to continue coverage, we would not necessarily consider changing our ratings at this time.

� All figures in this note are up to date only as of our last notes indicated on page four. Effective with this note, our last ratings should not be relied upon going forward. Our estimates and price targets are discontinued.

All figures in US dollars, unless otherwise stated. 08-88272 © 2008

CIBC World Markets does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

See "Important Disclosures" section at the end of this report for important required disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report, or at the end of each section hereof, where applicable.

Sector Weighting:

Overweight

CIBC World Markets Inc.1 (416) 594-7000

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Earnings Per Share12-18 Month Annual Earnings per Share Quarterly Earnings per Share

Price Target Rating Year One Year Two Year Three Year One Year TwoCompany Ticker Price Prior Current Prior Curr FYE Year Prior Current Prior Current Prior Current Qtr Prior Current Prior Current

Anatolia Minerals Development Ltd. (7) ANO C$4.30 C$7.25 None -- SO-S Dec 2006 -- -0.11A -0.20E -- -0.16E -- Q4-06 -- -0.02A -0.05E --

Coeur d'Alene Mines Corp. (2a, 2e, 2f, 2g) CDE 4.48 7.00 None -- SO Dec 2007 -- 0.14A 0.26E -- 0.52E -- Q1-07 -- 0.05A 0.03E --

Golden Star Resources Ltd. GSS 4.10 5.90 None -- SP Dec 2007 -- -0.17A 0.32E -- 0.66E -- Q1-07 -- -0.04A 0.02E --

Minco Silver Corporation (2a, 2e) MSV C$4.05 C$6.45 None -- SO-S Dec 2006 -- C$-0.16A C$-0.15E -- C$-0.08E -- Q4-06 -- C$-0.08A C$-0.04E --

Silvercorp Metals Inc. (2g) SVM C$9.17 C$12.50 None -- SO Mar 2007 -- C$0.15A C$0.40E -- C$0.45E -- Q4-07 -- C$0.04A C$0.08E --

Source: Company notes and CIBC World Markets.All figures in US dollars, unless otherwise stated.Important disclosure footnotes that correspond to the footnotes in this table may be found in the "Key to Important Disclosure Footnotes" section of this report.

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Cash Flow Per Share12-18 Month Annual Cash Flow per Share Quarterly Cash Flow per Share

Price Target Rating Year One Year Two Year Three Year One Year TwoCompany Ticker Price Prior Current Prior Curr FYE Year Prior Current Prior Current Prior Current Qtr Prior Current Prior Current

Anatolia Minerals Development Ltd. (7) ANO C$4.30 C$7.25 None -- SO-S Dec 2006 -- -0.10A -0.07E -- -0.09E -- Q4-06 -- -0.02A -0.01E --

Coeur d'Alene Mines Corp. (2a, 2e, 2f, 2g) CDE 4.48 7.00 None -- SO Dec 2007 -- 0.21A 0.32E -- 0.60E -- Q1-07 -- 0.07A 0.04E --

Golden Star Resources Ltd. GSS 4.10 5.90 None -- SP Dec 2007 -- 0.03A 0.47E -- 0.83E -- Q1-07 -- 0.00A 0.06E --

Minco Silver Corporation (2a, 2e) MSV C$4.05 C$6.45 None -- SO-S Dec 2006 -- C$-0.11A C$-0.11E -- C$-0.06E -- Q4-06 -- C$-0.05A C$-0.03E --

Silvercorp Metals Inc. (2g) SVM C$9.17 C$12.50 None -- SO Mar 2007 -- C$0.21A C$0.58E -- C$0.70E -- Q4-07 -- C$0.06A C$0.13E --

Source: Company notes and CIBC World Markets.All figures in US dollars, unless otherwise stated.Important disclosure footnotes that correspond to the footnotes in this table may be found in the "Key to Important Disclosure Footnotes" section of this report.

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Anatolia Minerals Development Ltd. – March 10, 2008

Coeur d’Alene Mines Corp. – March 10, 2008

Golden Star Resources Ltd. – March 10, 2008

Minco Silver Corporation – March 10, 2008

Silvercorp Metals Inc. – March 10, 2008

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IMPORTANT DISCLOSURES:

Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets are compensated from revenues generated by various CIBC World Markets businesses, including the CIBC World Markets Investment Banking Department within the Corporate and Leveraged Finance Division. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

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Key to Important Disclosure Footnotes: 1 CIBC World Markets Corp. makes a market in the securities of this company. 2a This company is a client for which a CIBC World Markets company has performed investment banking services

in the past 12 months. 2b CIBC World Markets Corp. has managed or co-managed a public offering of securities for this company in the

past 12 months. 2c CIBC World Markets Inc. has managed or co-managed a public offering of securities for this company in the

past 12 months. 2d CIBC World Markets Corp. has received compensation for investment banking services from this company in

the past 12 months. 2e CIBC World Markets Inc. has received compensation for investment banking services from this company in the

past 12 months. 2f CIBC World Markets Corp. expects to receive or intends to seek compensation for investment banking services

from this company in the next 3 months. 2g CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services

from this company in the next 3 months. 3a This company is a client for which a CIBC World Markets company has performed non-investment banking,

securities-related services in the past 12 months. 3b CIBC World Markets Corp. has received compensation for non-investment banking, securities-related services

from this company in the past 12 months. 3c CIBC World Markets Inc. has received compensation for non-investment banking, securities-related services

from this company in the past 12 months. 4a This company is a client for which a CIBC World Markets company has performed non-investment banking,

non-securities-related services in the past 12 months. 4b CIBC World Markets Corp. has received compensation for non-investment banking, non-securities-related

services from this company in the past 12 months. 4c CIBC World Markets Inc. has received compensation for non-investment banking, non-securities-related

services from this company in the past 12 months. 5a The CIBC World Markets Corp. analyst(s) who covers this company also has a long position in its common

equity securities. 5b A member of the household of a CIBC World Markets Corp. research analyst who covers this company has a

long position in the common equity securities of this company. 6a The CIBC World Markets Inc. fundamental analyst(s) who covers this company also has a long position in its

common equity securities. 6b A member of the household of a CIBC World Markets Inc. fundamental research analyst who covers this

company has a long position in the common equity securities of this company. 7 CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1%

or more of a class of equity securities issued by this company. 8 A partner, director or officer of CIBC World Markets Inc. or any analyst involved in the preparation of this

research report has provided services to this company for remuneration in the past 12 months. 9 A senior executive member or director of Canadian Imperial Bank of Commerce ("CIBC"), the parent company

to CIBC World Markets Inc. and CIBC World Markets Corp., or a member of his/her household is an officer, director or advisory board member of this company or one of its subsidiaries.

10 Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., has a significant credit relationship with this company.

11 The equity securities of this company are restricted voting shares. 12 The equity securities of this company are subordinate voting shares.

13 The equity securities of this company are non-voting shares. 14 The equity securities of this company are limited voting shares.

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CIBC World Markets Price Chart

No rating history data found for Anatolia Minerals Development Ltd.

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HISTORICAL PERFORMANCE OF CIBC WORLD MARKETS' RECOMMENDATIONS FOR COEUR D'ALENE MINES CORP. (CDE)

Date Change Type Closing Price Rating Price Target Coverage04/10/2005 3.52 SO 5.25 Michael Curran, CFA04/20/2005 3.68 NR None CIBC World Markets Inc.02/07/2006 4.87 SO 6.50 Brad Humphrey04/19/2006 7.37 SO 8.35 Brad Humphrey05/09/2006 6.32 SO 7.60 Brad Humphrey05/15/2006 5.17 SO 8.00 Brad Humphrey08/02/2006 5.33 SO 7.75 Brad Humphrey09/01/2006 5.56 SO 8.50 Brad Humphrey01/15/2007 4.45 SP 7.15 Brad Humphrey01/30/2007 4.35 SP 7.35 Brad Humphrey03/19/2007 3.95 SP 6.00 Brad Humphrey05/03/2007 3.90 R - Brad Humphrey12/11/2007 4.38 SP 6.00 Brad Humphrey12/19/2007 4.04 SP 5.70 Brad Humphrey01/16/2008 4.57 SO 6.25 Brad Humphrey03/10/2008 4.70 SO 7.00 Brad Humphrey

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HISTORICAL PERFORMANCE OF CIBC WORLD MARKETS' RECOMMENDATIONS FOR GOLDEN STAR RESOURCES LTD. (GSS)

Date Change Type Closing Price Rating Price Target Coverage10/23/2005 2.69 SP 3.40 Brad Humphrey11/04/2005 2.58 SP 3.15 Brad Humphrey01/04/2006 3.05 SP 3.30 Brad Humphrey02/08/2006 3.35 SP 3.85 Brad Humphrey03/31/2006 3.19 SP 3.25 Brad Humphrey05/14/2006 3.22 SP 4.50 Brad Humphrey08/31/2006 3.28 SP 4.85 Brad Humphrey10/02/2006 2.65 SP 4.05 Brad Humphrey02/08/2007 3.72 SP 3.75 Brad Humphrey03/15/2007 3.87 SP 4.50 Brad Humphrey10/11/2007 4.14 SP 5.00 Brad Humphrey01/07/2008 3.29 SP 5.15 Brad Humphrey03/10/2008 3.66 SP 5.90 Brad Humphrey

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No rating history data found for Minco Silver Corporation

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No rating history data found for Silvercorp Metals Inc.

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CIBC World Markets' Stock Rating System

Abbreviation Rating Description

Stock Ratings

SO Sector Outperformer Stock is expected to outperform the sector during the next 12-18 months.

SP Sector Performer Stock is expected to perform in line with the sector during the next 12-18 months.

SU Sector Underperformer Stock is expected to underperform the sector during the next 12-18 months.

NR Not Rated CIBC World Markets does not maintain an investment recommendation on the stock.

R Restricted CIBC World Markets is restricted*** from rating the stock.

Sector Weightings**

O Overweight Sector is expected to outperform the broader market averages.

M Market Weight Sector is expected to equal the performance of the broader market averages.

U Underweight Sector is expected to underperform the broader market averages.

NA None Sector rating is not applicable.

**Broader market averages refer to the S&P 500 in the U.S. and the S&P/TSX Composite in Canada. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. ***Restricted due to a potential conflict of interest.

Ratings Distribution*: CIBC World Markets' Coverage Universe

(as of 16 Mar 2008) Count Percent Inv. Banking Relationships Count Percent

Sector Outperformer (Buy) 155 44.4% Sector Outperformer (Buy) 122 78.7%

Sector Performer (Hold/Neutral) 160 45.8% Sector Performer (Hold/Neutral) 127 79.4%

Sector Underperformer (Sell) 25 7.2% Sector Underperformer (Sell) 14 56.0%

Restricted 8 2.3% Restricted 7 87.5%

Ratings Distribution: Precious Metals Coverage Universe

(as of 16 Mar 2008) Count Percent Inv. Banking Relationships Count Percent

Sector Outperformer (Buy) 15 53.6% Sector Outperformer (Buy) 9 60.0%

Sector Performer (Hold/Neutral) 7 25.0% Sector Performer (Hold/Neutral) 2 28.6%

Sector Underperformer (Sell) 5 17.9% Sector Underperformer (Sell) 3 60.0%

Restricted 1 3.6% Restricted 1 100.0%

Precious Metals Sector includes the following tickers: ABX, AEM, AGI, AMC, ANO, ARU, AU, AUY, CDE, CG, CRJ, EET, EGO, GFI, GG, GSS, HL, HRG, IAG, KGC, MSV, NEM, NXG, OZN, PAAS, QGX, SLW, SVM.

*Although the investment recommendations within the three-tiered, relative stock rating system utilized by CIBC World Markets do not correlate to buy, hold and sell recommendations, for the purposes of complying with NYSE and NASD rules, CIBC World Markets has assigned buy ratings to securities rated Sector Outperformer, hold ratings to securities rated Sector Performer, and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting.

Important disclosures required by IDA Policy 11, including potential conflicts of interest information, our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at http://research.cibcwm.com/res/Policies/Policies.html or by writing to CIBC World Markets Inc., BCE Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attention: Research Disclosures Request.

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Legal Disclaimer

This report is issued and approved for distribution by (i) in the United States, CIBC World Markets Corp., a member of the New York Stock Exchange ("NYSE"), NASD and SIPC, (ii) in Canada, CIBC World Markets Inc., a member of the Investment Dealers Association ("IDA"), the Toronto Stock Exchange, the TSX Venture Exchange and CIPF, (iii) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority ("FSA"), and (iv) in Australia, CIBC World Markets Australia Limited, a member of the Australian Stock Exchange and regulated by the ASIC (collectively, "CIBC World Markets"). This report is provided, for informational purposes only, to institutional investor clients of CIBC World Markets in the United States and Canada and retail clients of CIBC World Markets in Canada, 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. This document and any of the products and information contained herein are not intended for the use of private investors in the United Kingdom. Such investors will not be able to enter into agreements or purchase products mentioned herein from CIBC World Markets plc. The comments and views expressed in this document are meant for the general interests of clients of CIBC World Markets Australia Limited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of CIBC World Markets. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances. CIBC World Markets suggests that, prior to acting on any of the recommendations herein, Canadian retail clients of CIBC World Markets contact one of our client advisers in your jurisdiction to discuss your particular circumstances. Non-client recipients of this report who are not institutional investor clients of CIBC World Markets should consult with an independent financial advisor prior to making any investment decision based on this report or for any necessary explanation of its contents. CIBC World Markets will not treat non-client recipients as its clients solely by virtue of their receiving this report.

Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. CIBC World Markets accepts no liability for any loss arising from the use of information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to CIBC World Markets. Information, opinions and statistical data contained in this report were obtained or derived from sources believed to be reliable, but CIBC World Markets does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by CIBC World Markets or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser. This report may provide addresses of, or contain hyperlinks to, Internet web sites. CIBC World Markets has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third-party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk.

Although each company issuing this report is a wholly owned subsidiary of Canadian Imperial Bank of Commerce ("CIBC"), each is solely responsible for its contractual obligations and commitments, and any securities products offered or recommended to or purchased or sold in any client accounts (i) will not be insured by the Federal Deposit Insurance Corporation ("FDIC"), the Canada Deposit Insurance Corporation or other similar deposit insurance, (ii) will not be deposits or other obligations of CIBC, (iii) will not be endorsed or guaranteed by CIBC, and (iv) will be subject to investment risks, including possible loss of the principal invested. The CIBC trademark is used under license.

© 2008 CIBC World Markets Corp. and CIBC World Markets Inc. All rights reserved. Unauthorized use, distribution, duplication or disclosure without the prior written permission of CIBC World Markets is prohibited by law and may result in prosecution.

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† All numbers are after stock-based compensation expense, normalized consistent with BSC option expense policy. Bear Stearns does and seeks to do business with companies covered in its research reports. As a result investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Customers of Bear Stearns in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.bearstearns.com/independentresearch or can call (800) 517-2327 to request a copy of this research. Investors should consider this report as only a single factor in making their investment decision. PLEASE REFER TO PAGE 3 OF THIS REPORT FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION BEAR, STEARNS & CO. INC. 383 MADISON AVENUE NEW YORK, NY 10179 (212) 272-2000 WWW.BEARSTEARNS.COM

METALS & MINING - PRECIOUS METALS

Bear, Stearns & Co. Inc. – U.S. Equity Research November 30, 2007

Companies Covered Company Cl. Price Rtg Apex Silver $17.11 P Coeur D'Alene Mines $4.32 O Newmont Mining Co $51.39 O NovaGold Resources $10.09 P Pan American Silver Corp. $32.50 O Silver Standard Resources $36.72 P Stillwater Mining $9.76 P

O=Outperform; P=Peer Perform; U=Underperform Securities in this report priced as of: November 29, 2007 16:00ET

Sector Rating Metals & Mining - Precious Metals Market Overweight

Equity Research Analyst(s) Michael Dudas, CFA 212-272-2289 [email protected] Anthony Young 212-272-2616 [email protected]

Capital Costs Increase Across the Industry; But Conference Participants Remain Positive About the Intermediate Term

• We had the opportunity to host eight precious metal companies at the Bear Stearns Commodities and Capital goods conference. Several themes emerged during the conference which are impacting the industry.

• Capital costs continue to increase on development projects, with multiple companies indicating that the cost to build mines has increased. This can largely be attributed to a lack of skilled labor and increased costs for construction material.

• Project delays continue to plague the industry, due to a lack of construction personnel and the complexity of the projects being undertaken. Given the remote locations where global mining projects are taking place, and the lack of skilled labor, the environment for completing projects on time will remain challenging.

• Despite the previously mentioned difficulty, the industry remains overwhelmingly optimistic. While the executives that were attending our conference were uncertain if the current metal prices were sustainable, the majority believed that elevated precious metal prices would be a continuing feature for the intermediate term.

• The companies are using their strong cash flows to fund increased exploration budgets. Numerous companies indicated that they are pursuing both greenfield and brownfield exploration to augment decreasing ore grades at existing mines, and to increase their production capability.

• Given the recent tightness in the credit market, the M&A environment has slowed down, but one large precious metals company is divesting assets, in order to help finance a sizable acquisition.

• We remain positive on our Outlook and continue to rate the sector at Market Overweight. We believe that industry participants continue to behave rationally even though precious metal prices remain at elevated prices, and we believe this will ultimately lead to positive returns for investors.

Rating and Price Target (All values are in USD)

-------------- Rating -------------- ----------- Price Target ----------- Company

To From Year To FromApex Silver(SIL) Peer Perform Peer Perform 2008 -- --Coeur D'Alene Mines(CDE) Outperform Outperform 2008 5.50 5.50Newmont Mining Co(NEM) Outperform Outperform 2008 62.00 62.00NovaGold Resources(NG) Peer Perform Peer Perform 2008 -- --Pan American Silver Corp.(PAAS) Outperform Outperform 2008 38.00 38.00Silver Standard Resources(SSRI) Peer Perform Peer Perform 2008 -- --Stillwater Mining(SWC) Peer Perform Peer Perform 2008 -- --

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BEAR, STEARNS & CO. INC. 383 MADISON AVENUE NEW YORK, NY 10179 (212) 272-2000 WWW.BEARSTEARNS.COM 2

INDUSTRY OVERVIEW We had the opportunity to host eight precious metal companies at the Bear Stearns Commodities and Capital goods conference, and numerous industry consultants and investors. Several themes, which we have discussed in the past, continue to impact the industry: increasing capital costs, a lack of skilled labor and deteriorating ore grades. These negatives are being offset by a attractive precious metal prices, which are offsetting the increasing cost pressures, and in some cases leading to increasing margins. Given recent announcement, increasing capital costs were the overriding theme in the precious metals space. NovaGold recently announced the halting of construction of a major copper/gold deposit in Canada due to a meaningful escalation of capital costs. Further, Silver Standard Resources indicated that its first development project had seen a slight increase in capital cost, with a portion of this increase related to a possible expansion. Given increased material (steel, concrete, etc.), consumable (fuel, explosives, etc.) and labor expenses, we would not be surprised to see a wave of capital cost increases across the industry, and the possibility of the halting of projects, similar to the action undertaken by NovaGold and Teck Cominco. While we do not believe that precious metals such as gold trade based upon supply/demand fundamentals, we do believe that the decrease in projects will inherently make operating projects more valuable due to their scarcity. Precious metal companies are having to turn to more remote jurisdictions in order to find new projects; this is leading to the companies having to build complex infrastructure projects before construction can commence. This is leading to longer lead times, and can contribute to missed deadlines. Additionally, these remote locations often have higher turnover, as the work schedule leads to long stretches on the mine site, with workers sometimes working two weeks and having one week off. This high turnover was cited by one company as a reason for higher than anticipated cash costs, as they were continually having to train new miners, which leads to a decrease in productivity. Despite the previously mentioned difficulty, the industry remains overwhelmingly optimistic, with companies continuing to invest in exploration, and committing capital to new projects. The companies are using their strong cash flows to fund these increased budgets, with several companies indicating no need to return to the capital markets to fund sizable projects, for as long as metal prices remain in the current range. We believe that management teams in the industry are becoming more shareholder-friendly, and if this discipline remains in place, we may see multiples begin to expand again, over time. The M&A environment has definitely slowed down, given the tightness in the credit markets, with only one large precious metals company pursuing an acquisition at the time of the conference. Given the difficulty in building large-scale projects, we believe that M&A activity will likely revive, once the credit crunch is past. We remain positive on our Outlook and continue to rate the sector at Market Overweight. We believe that industry participants continue to behave rationally even though precious metal prices remain at elevated prices, and we believe this will ultimately lead to positive returns for long-term investors.

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BEAR, STEARNS & CO. INC. 383 MADISON AVENUE NEW YORK, NY 10179 (212) 272-2000 WWW.BEARSTEARNS.COM 3

Important Disclosures The costs and expenses of Equity Research, including the compensation of the analyst(s) that prepared this report, are paid out of the Firm's total revenues, a portion of which is generated through investment banking activities. This report has been prepared in accordance with the Firm's conflict management policies. Bear Stearns is unconditionally committed to the integrity, objectivity, and independence of its research. Bear Stearns research analysts and personnel report to the Director of Research and are not subject to the direct or indirect supervision or control of any other Firm department (or members of such department). This publication and any recommendation contained herein speak only as of the date hereof and are subject to change without notice. Bear Stearns and its affiliated companies and employees shall have no obligation to update or amend any information or opinion contained herein, and the frequency of subsequent publications, if any, remain in the discretion of the author and the Firm. Analyst Certification

The research analyst(s) primarily responsible for the preparation of this research report hereby certify that all of the views expressed in this research report accurately reflect their personal views about any and all of the subject securities or issuers. The research analyst(s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. Michael Dudas

Companies Analyzed

* Apex Silver (SIL) - $17.11 (as of November 29, 2007 16:00 ET) - Peer Perform * Coeur D'Alene Mines (CDE) - $4.32 (as of November 29, 2007 16:00 ET) - Outperform Price Target ('08): $5.50 Risk(s) to Price Target - Commodity, Economic, lower gold and silver prices, delays in commercial development of mines Valuation Methodology - Price to Cash Flow * Newmont Mining Co (NEM) - $51.39 (as of November 29, 2007 16:00 ET) - Outperform Price Target ('08): $62.00 Risk(s) to Price Target - Lower than expected gold price realizations, lower volumes, higher than expected operating costs and overall fear of commodity deflation. Valuation Methodology - Price/Cash Flow * NovaGold Resources (NG) - $10.09 (as of November 29, 2007 16:00 ET) - Peer Perform * Pan American Silver Corp. (PAAS) - $32.50 (as of November 29, 2007 16:00 ET) - Outperform Price Target ('08): $38.00 Risk(s) to Price Target - Lower precious and base metal prices, Delays in its development projects Valuation Methodology - P/NAV, P/CF, EV/EBITDA * Silver Standard Resources (SSRI) - $36.72 (as of November 29, 2007 16:00 ET) - Peer Perform * Stillwater Mining (SWC) - $9.76 (as of November 29, 2007 16:00 ET) - Peer Perform Pan American Silver Corp. (PAAS): Bear, Stearns & Co. Inc. is a market maker in this company's equity securities. Silver Standard Resources (SSRI): Bear, Stearns & Co. Inc. is a market maker in this company's equity securities. For important disclosure information regarding the companies in this report, please contact your registered representative at 1-800-999-2000, or write to Sandra Pallante, Equity Research Compliance, Bear, Stearns & Co. Inc., 383 Madison Avenue, New York, NY 10179. Bear, Stearns & Co. Inc. Equity Research Rating System:

Ratings for Stocks (vs. analyst coverage universe): Outperform (O) - Stock is projected to outperform analyst's industry coverage universe over the next 12 months.

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BEAR, STEARNS & CO. INC. 383 MADISON AVENUE NEW YORK, NY 10179 (212) 272-2000 WWW.BEARSTEARNS.COM 4

Peer Perform (P) - Stock is projected to perform approximately in line with analyst's industry coverage universe over the next 12 months. Underperform (U) - Stock is projected to underperform analyst's industry coverage universe over the next 12 months. Ratings for Sectors (vs. regional broader market index): Market Overweight (MO) - Expect the industry to perform better than the primary market index for the region (S&P 500 in the US) over the next 12 months. Market Weight (MW) - Expect the industry to perform approximately in line with the primary market index for the region (S&P 500 in the US) over the next 12 months. Market Underweight (MU) - Expect the industry to underperform the primary market index for the region (S&P 500 in the US) over the next 12 months. Bear, Stearns & Co. Inc. Ratings Distribution as of September 30, 2007: Percentage of BSC universe with this rating / Percentage of these companies which were BSC investment banking clients in the last 12 months. Outperform (Buy): 44.5 / 15.6 Peer Perform (Neutral): 48.4 / 9.3 Underperform (Sell): 7.1 / 6.5 Securities covered by the author(s) of this report include: Michael Dudas (Metals & Mining - Precious Metals): Apex Silver, Barrick Gold, Coeur D'Alene Mines, Newmont Mining Co, Stillwater Mining, Pan American Silver Corp., Silver Standard Resources, NovaGold Resources

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BEAR, STEARNS & CO. INC. 383 MADISON AVENUE NEW YORK, NY 10179 (212) 272-2000 WWW.BEARSTEARNS.COM 5

Disclaimers OTHER DISCLAIMERS This report has been prepared by Bear, Stearns & Co. Inc., Bear, Stearns International Limited or Bear Stearns Asia Limited (together with their affiliates, "Bear Stearns"), as indicated on the cover page hereof. Responsibility for the content of this report has been accepted by Bear, Stearns & Co. Inc. for distribution in the United States. If you are a recipient of this publication in the United States, orders in any securities referred to herein should be placed with Bear, Stearns & Co. Inc. This report has been approved for publication in the United Kingdom by Bear, Stearns International Limited, which is authorized and regulated by the United Kingdom Financial Services Authority. Private Customers in the U.K. should contact their Bear, Stearns International Limited representatives about the investments concerned. This report is distributed in Hong Kong by Bear Stearns Asia Limited, which is regulated by the Securities and Futures Commission of Hong Kong. Recipients of this report from Bear Stearns Asia Limited should contact representatives of the latter in relation to any matter referred to herein. Additional information is available upon request. Bear Stearns and its employees, officers, and directors deal as principal in transactions involving the securities referred to herein (or options or other instruments related thereto), including in transactions which may be contrary to any recommendations contained herein. Bear Stearns and its employees may also have engaged in transactions with issuers identified herein. Bear Stearns is affiliated with a specialist that may make a market in the securities of the issuers referred to in this document, and such specialist may have a position (long or short) and may be on the opposite side of public orders in such securities. This publication does not constitute an offer or solicitation of any transaction in any securities referred to herein. Any recommendation contained herein may not be suitable for all investors. Although the information contained in the subject report (not including disclosures contained herein) has been obtained from sources we believe to be reliable, the accuracy and completeness of such information and the opinions expressed herein cannot be guaranteed. This publication and any recommendation contained herein speak only as of the date hereof and are subject to change without notice. Bear Stearns and its affiliated companies and employees shall have no obligation to update or amend any information or opinion contained herein. This publication is being furnished to you for informational purposes only and on the condition that it will not form the sole basis for any investment decision. Each investor must make their own determination of the appropriateness of an investment in any securities referred to herein based on the tax, or other considerations applicable to such investor and its own investment strategy. By virtue of this publication, neither Bear Stearns nor any of its employees, nor any data provider or any of its employees shall be responsible for any investment decision. This report may not be reproduced, distributed, or published without the prior consent of Bear Stearns. ©2007. All rights reserved by Bear Stearns. Bear Stearns and its logo are registered trademarks of The Bear Stearns Companies Inc. This report may discuss numerous securities, some of which may not be qualified for sale in certain states and may therefore not be offered to investors in such states. This document should not be construed as providing investment services. 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In order for Bear Stearns to comply with Internal Revenue Service Circular 230 (if applicable), you are notified that any discussion of U.S. federal tax issues contained or referred to herein is not intended or written to be used, and cannot be used, for the purpose of: (A) avoiding penalties that may be imposed under the Internal Revenue Code; nor (B) promoting, marketing or recommending to another party any transaction or matter discussed herein.

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Deutsche Bank@

IMPORTANT: All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Independent, third-party research (IR) on certain companies covered by DBSI's research is available to customers of DBSI in the United States at no cost. Customers can access this IR at http://gm.db.com, or call 1-877-208-6300 to request that a copy of the IR be sent to them. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.

Co

mm

od

itie

s

Researc

h

Glo

ba

l M

ark

ets

Re

se

arc

h

• The fortunes of the US dollar have an

important bearing on global commodity

markets. Among other things, dollar

weakness has propelled precious metal

prices higher and encouraged OPEC to

target higher oil prices, in our view.

• Next year the current US dollar bear cycle

will enter its seventh year. As a result the

current period of dollar weakness should

not be seen as surprising. Since 1972 the

average duration of a US dollar cycle has

been seven years and the end of every cycle

has been marked by the exchange rate

moving to more than +/-20% away from its

long-run Purchasing Power Parity (PPP)

path.

• Last month we estimate the US dollar was

more than 20% undervalued against the

euro. When such an extreme level of

overshooting appears there has tended to

be an assumption by market players that a

reversal in the exchange rate will follow

soon after.

• This reflects the historyt that over the past

30 years, the dollar has tended to trade in

excess of +/-20% away from its PPP path no

more than 10% of the time.

• However, today we calculate the implied

probability of EURUSD trading the 1.50 level

is 60% in one year and 71% in two years’

time. Conversely, the market assigns a 11%

and 25% probability of EURUSD trading the

1.30 level in one and two years time

respectively.

• Like the options market, we too believe

risks are skewed to new highs in EURUSD

going forward. Indeed it is worth

remembering that since 1985 a turn in every

US dollar cycle has tended to coincide with

aggressive rounds of either G3 or G7 central

bank FX intervention.

• We believe current US dollar weakness will

be tolerated by the official sector as it will

assist in correcting the US current account

deficit which fell from 6.7% of GDP in 2006

to an estimated 5.1% of GDP this year. In

Europe, dollar weakness will assist central

bank efforts to stem rising inflationary risks

from the surge in food and energy prices.

Since the birth of floating exchange rates in 1972, it has been a common feature of exchange rate markets for currencies to overshoot their long-run equilibrium levels either to the upside or downside. An overshooting in an exchange rate is normally defined as when an exchange rate moves more than +/-20% away from its long-run purchasing power parity path.

However, such overshooting events are rare. We find that over the last 30 years, major currencies have fluctuated around the US dollar within bands of 20% for more than 90% of the time. As a result when an exchange rate moves beyond these 20% bands there is a tendency for market players to assume the probability of a reversal will increase rapidly the longer the exchange rate remains ‘misaligned’.

While we expect new lows in the US dollar, it is understandable that some may be looking for a bigger picture turn in EURUSD given the over 20% undervaluation of the US dollar vs. DB’s PPP estimate. However, Figure 1 illustrates the cumulative Black-Scholes knockout probabilities for various levels of EURUSD over various time horizons.

Commodities Special

Precious Metals In Times Of USD Overshooting

02 November 2007

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Deutsche Bank@ Commodities Special 02 November 2007

2 Global Markets Research

We find that the implied probability of EURUSD trading the 1.30 level, which would be equivalent to a 10% correction, stands at 11% in one year and 25% in two years. Conversely the probability of the 1.50 level being reached is 60% in one year and 71% in two years time.

Figure 1: Cumulative Black-Scholes EURUSD

knockout probabilities

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

3M 6M 9M 12M 18M 2Y 3Y

1.50

1.25

1.30

1.60

1.351.55

Probabilities were calculated with EURUSD spot reference of 1.4450

Source: DB Global Markets Research

These probabilities would assume market players anticipate an extended period of US dollar weakness similar to the start of the 1990s when the US dollar was trading around 20% undervalued against the euro for a number of years, Figure 2.

Figure 2: EURUSD vs. Purchasing Power Parity

0.60

0.80

1.00

1.20

1.40

1.60

1973 1977 1981 1985 1989 1993 1997 2001 2005

0.60

0.80

1.00

1.20

1.40

1.60

EURUSD

20% Band

PPP EURUSD

Source: DB Global Markets Research

On an historical perspective, the degree of ‘misalignment’ of the US dollar compared to PPP today is not extreme if one assumes the end of this US dollar cycle will also be marked by extreme levels of undervaluation. We find that the turn in the US dollar in 1980 and 1995 saw the dollar become 40% undervalued versus the “euro basket”. In 1985 and 2000 the dollar was ‘overvalued’ by as much as 37%, Figure 3. to reach these levels would require EURUSD rising to between 1.58-1.60. Implied

knockout probabilities attach a 14.5% probability and 30% probability of this occurring in one and two years’ time respectively.

Figure 3: Measuring the under-/over-valuation

of the US dollar since 1973

-50

-40

-30

-20

-10

0

10

20

30

40

50

1973 1977 1981 1985 1989 1993 1997 2001 2005

US dollar overvalued

US dollar undervalued

EURUSD Purchasing Power Parity (%)

Turning pointsin the US dollar

Source: DB Global Markets Research

These levels of the US dollar would imply precious metal prices rising a further 15-30% in US dollar terms. For example, based on the past two years correlation with the US dollar it would imply gold prices rising to USD900/oz, silver hitting USD19/oz, platinum at USD1,650/oz and palladium reaching USD460/oz. According to knockout probabilities the implied probability for gold to trade at the USD950/oz level stands at 38% and 56% in one and two years time respectively, Figure 4.

Figure 4: Cumulative black-Scholes gold price

knockout probabilities

0

20

40

60

80

100

120

6M 12M 18M 24M 30M 36M

575

6501025

950

725

875

800

%

Source: DB Global Markets Research

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02 November 2007 Commodities Special Deutsche Bank@

Global Markets Research 3

Conclusion

The end of every US dollar cycle since the birth of floating exchange rates has been marked by extreme periods of overshooting and central bank FX intervention. We believe this cycle will prove no different. The non-linear relationship between the US dollar and the gold price also suggests the gold price is at risk of overshooting to the upside. We find that since 1980 the gold price has tended to react more to incremental changes in the US dollar when the dollar is trading at depressed levels, Figure 5.

Figure 5: The non-linear relationship between

the gold price & the DXY dollar index

70

90

110

130

150

170

0 100 200 300 400 500 600 700 800 900

DXY

Gold price (USD/oz)

DXY vs gold price, 1980-2007

Source: DB Global Markets Research

Michael Lewis, (44) 20 7545 2166

[email protected]

Trevor Dinmore, (44) 7547 1796

[email protected]

For more details of US dollar overshooting please see the report “When FX Goes Out of Bounds” published in Exchange Rate Perspectives, DB Global Markets Research, 18 January 2007.

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Deutsche Bank@ Commodities Special 02 November 2007

4 Global Markets Research

Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analysts. In addition, the undersigned lead analysts have not and will not receive any compensation for providing a specific recommendation or view in this report. Michael Lewis Regulatory Disclosures Disclosures required by United States laws and regulations

See company-specific disclosures above for any of the following disclosures required for covered companies referred to in this report: acting as a financial advisor, manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/comanaged public offerings in prior periods; directorships; market making and/or specialist role.

The firm may trade as principal in the fixed income securities (or in related derivatives) that are the subject of this research report.

Additional disclosures required under the laws and regulations of jurisdictions other than the United States The following disclosures are those required by the jurisdiction indicated, in addition to those already made pursuant to United States laws and regulations. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com

Special Disclosure

Analyst compensation: Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking revenues

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Hong Kong: See http://gm.db.com for company-specific disclosures required under Hong Kong regulations in connection with this research report. Disclosure #5 includes an associate of the research analyst. Disclosure #6, satisfies the disclosure of financial interests for the purposes of paragraph 16.5(a) of the SFC's Code of Conduct (the "Code"). The 1% or more interests is calculated as of the previous month end. Disclosures #7 and #8 combined satisfy the SFC requirement under paragraph 16.5(d) of the Code to disclose an investment banking relationship.

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02 November 2007 Commodities Special Deutsche Bank@

Global Markets Research 5

DISCLAIMER

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This published research report may be considered by Deutsche Bank when Deutsche Bank is deciding to buy or sell proprietary positions in the securities mentioned in this report.

For select companies, Deutsche Bank equity research analysts may identify shorter-term opportunities that are consistent or inconsistent with Deutsche Bank's existing, longer-term Buy or Sell recommendations. This information is made available on the SOLAR stock list, which can be found at http://gm.db.com.

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Opinions, estimates and projections in this report constitute the current judgement of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, except if research on the subject company is withdrawn. Prices and availability of financial instruments also are subject to change without notice. This report is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction or as an advertisement of any financial instruments.

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David Folkerts-Landau Managing Director

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Global Company Research Global Fixed Income Strategies & Economics

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IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS AND INFORMATION ON TRADE ALERTS AND ANALYST MODEL PORTFOLIOS ARE IN THE DISCLOSURE APPENDIX. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Customers of Credit Suisse in the United States can receive independent, third party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.credit-suisse.com/ir or call 1 877 291 2683 or email [email protected] to request a copy of this research.

30 October 2007Americas/CanadaEquity Research

Precious Metals (Metals & Mining - Precious Metals) / OVERWEIGHT

Precious Metals SECTOR REVIEW

Q3 Earnings Preview Gold sector heats up

In light of recent uncertainty about the state of the US economy, underperformance of the US dollar relative to most major currencies, and fundamental demand from the on-going Indian wedding and festival season providing a floor on the bullion price, we continue to expect an influx of investment funds to the gold equities sector. We also expect the M&A activity to heat up given the over 30% run up in equity prices since mid-August, on the heels of one of the industry’s M&A triggers, the Denver Gold Forum, as evidenced recently by Newmont’s offer for Miramar (MAE.TO), Barrick’s offer for Arizona Star (AZS.TO) and Northgate’s offer for Perseverance (PSV.AU).

Gold price up 2% over Q2/07, copper price remains strong

LME quarterly average gold price of $681/oz in Q3/07 increased 2% compared to $668/oz in the Q2/07 and 9.7% compared to $621/oz in Q3/06. Copper price remained strong in Q3/07 at $3.50/lb versus to $3.47/lb in Q2/07 and $3.46/lb in Q3/06. Yamana is most likely to benefit from strong copper prices as the Chapada mine is expected to produce 130mlbs of copper in 2007 or 47% of YRI’s revenue.

Higher input costs and strength of the CAD to dent profits a little

Higher fuel and consumables costs remain a concern with oil hitting $80 a barrel in Q3/07. The Canadian dollar appreciated 5% (from CAD1.098/USD to CAD1.046/USD) over the quarter which will most affect Goldcorp (47% of 2007 production is Canadian) and Northgate (100% of 2007 production is Canadian) of the companies in our coverage universe.

Smaller intermediates continue to struggle

Golden Star guided for EPS of a loss of $0.06/sh in conjunction with an announcement that the company would be issuing $125 million of convertible debt, below our expectation of a loss of $0.034/sh and well below consensus estimates of a loss of $0.01/sh. Eldorado is expected to provide an update to legal situation and the shut down at the Kisladag mine on its November 1 conference call. The company re-iterated during the Denver Gold Forum in late September, its expectation that a resolution to the situation would be achieved by early November.

Revisions to EPS

We have revised our Q3/07 and 2007FY EPS estimates downward slightly for Northgate Minerals, Golden Star, Goldcorp and Kinross, and upward for Yamana, the result of marking to market our commodity price forecasts to Q3 commodity prices (including hedges) and recent operating and financial guidance.

Research Analysts

Anita Soni, P. Eng., CFA 416 352 4587

[email protected]

Brian Morales, CA 416 352 4590

[email protected]

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Precious Metals 2

Earnings schedule The following table details the Q3 earnings release schedule for the companies in the North American coverage universe.

Exhibit 1: Gold Equities Earnings Schedule Credit Suisse North American Coverage

Company Ticker Reporting Date Reporting Time Conference Call Date

Conference Call Time (EST)

Conference Call Details

Meridian MNG.TO 23-Oct After market N/A N/A N/A

Barrick ABX 31-Oct After market 1-Nov 9:30 AM 416-620-5690/1-800-633-8942

Newmont NEM 31-Oct N/A 31-Oct 4:00 PM 210-234-0000 PW: Newmont

Eldorado ELD.TO 1-Nov Before market 1-Nov 11:30 AM 416-641-6117

Northgate NGX.TO 5-Nov Before market 5-Nov 10:00 AM 416-644-3415/1-800-733-7560

Golden Star GSC.TO 6-Nov After market 7-Nov 11:00 AM (866) 578-5801 PW: 17893775

Kinross K.TO 7-Nov After market 7-Nov 5:30 PM 416-915-5761

Yamana YRI.TO 7-Nov After market 8-Nov 11:00 AM 416-641-6125

Goldcorp G.TO 9-Nov Before market 9-Nov 1:00 PM 416-641-6125

Not Rated

Company Ticker Reporting Date Reporting Time Conference Call Date

Conference Call Time (EST)

Conference Call Details

Centerra Gold CG.TO 30-Oct After market 31-Oct 11:00 AM (800) 926-5085

Alamos Gold AGI.TO 8-Nov After market 9-Nov 11:00 AM 416-641-6121

IAMGold IMG.TO 13-Nov Before market 13-Nov 11:00 AM 416-644-3414/1-800-733-7571

Gammon GAM.TO N/A N/A N/A N/A N/A

Source: Company data

The following table details Credit Suisse EPS estimates and consensus estimates for the companies in the North American coverage universe and other gold equities not currently rated.

Exhibit 2: EPS Estimates Credit Suisse North American Coverage

CS Estimate Consensus Actual

Company Analyst Q3/07 Old

Q3/07 Current

2007 Old

2007 Current

Q3/07 2007 Q2/07 Q3/06 2006

Meridian* Soni 0.20 0.79 0.23 0.90 0.22 0.06 0.48Barrick Gagliano 0.44 1.81 0.40 1.47 0.43 0.51 1.91Newmont Gagliano 0.23 0.94 0.25 0.81 0.24 0.38 1.63Eldorado Soni 0.04 0.18 0.03 0.17 0.08 0.02 0.01Northgate Soni 0.06 0.04 0.28 0.07 0.33 0.08 0.07 0.48Golden Star Soni -0.03 -0.06 -0.09 -0.11 -0.02 -0.04 -0.02 0.01 0.31Kinross Soni 0.11 0.09 0.37 0.08 0.37 0.09 0.14 0.46Yamana Soni 0.15 0.20 0.67 0.71 0.25 0.76 0.22 -0.04 -0.20Goldcorp Soni 0.18 0.16 0.64 0.62 0.15 0.59 0.13 0.14 0.93

Not Rated

Consensus Actual

Company Q3/07 2007 Q2/07 Q3/06 2006Centerra 0.02 0.16 0.09 0.05 0.28

Alamos 0.04 0.14 0.02 0.01 -0.05

IAMGold 0.06 0.24 -0.28 0.08 0.39

Gammon -0.05 -0.31 -0.23 -0.18 -0.33

*Reported EPS of $(0.13) for the quarter Source: Bloomberg, Credit Suisse estimates

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Eldorado Gold (ELD.TO, Outperform, Target Price C$7.50)

Eldorado is expected to report Q3/07 financial results before market open on November 1. With only a half quarter of production at Kisladag after the shut-down at the mine due to the court imposed injunction, (which commenced August 20 and is still in effect), we estimate earnings of $0.04/sh (down from $0.08/sh in the Q2/07) compared to consensus forecasts of $0.03/sh. We are forecasting Q3/07 production of 68.3kozs at $274/oz and 303kozs at $274/oz for the full year 2007, which assumes a restart in operations at Kisladag by December.

Given that October is now almost at a close and the company had previously indicated that Kisladag would resume operation by November, ELD will likely provide an update on the status of the legal issue at the Kisladag mine. At the Denver Gold Forum the company re-iterated its expectation of a resolution by early-November. An announcement of a delay to the restart date would likely have a negative impact on the share price. We are currently forecasting a restart of operations by December in our model.

Northgate Minerals (NGX.TO, Neutral, Target Price C$3.30)

Northgate is expected to release results prior to its conference call scheduled on Nov. 5.

We have revised our operating EPS estimate for the third quarter to $0.04 from $0.06, and 2007, the result of marking to market for Q3/07 commodity prices, including the company’s commodity hedges. It should be noted that the headline number (non operating) will likely include a one time write-down of Kemess North and will come in well below our operating EPS forecasts.

We are forecasting Q3 production of 69.4kozs of gold, 17.7mlbs of copper and total cash costs of $33/oz. For the year we are forecasting 276kozs of gold, 65mlbs of copper and cash costs of $25/oz.

On October 28, Northgate announced a friendly deal to acquire Perseverance Corporation (PSV.AU) for A$0.20/sh in cash, a 37.9% premium to the closing price on October 26. The deal includes an assumption of PSV’s debt of $30.6 million and a close out of the company’s hedgebook valued at $43.8 million with a total transaction value of $257 million.

The transaction is unanimously supported by Perseverance's Board of Directors, however is still subject to regulatory approval in Australia and must still be approved by Perseverance shareholders. The required approval thresholds are at least 75% by shareholders (and at least 50% by those who voted) and 75% by convertible note holders. The anticipated closing of the transaction is February 2008.

Northgate is estimating 2008 production of approximately 434kozs of gold and 71mlbs of copper compared to our 2008 stand-alone forecast of 229kozs of gold and 67mlbs of copper. Based on 1.1mozs at June 30, 2007, the transaction values Perseverance at $229/oz.

Golden Star Resources (GSC.TO, Neutral, Target Price C$4.25)

GSC is expected to release third quarter results after market close on Nov. 6.

On Oct. 4, we revised our EPS estimate for the quarter and for 2007 to $(0.03) and $(0.09) respectively, after the company released Q3/07 production guidance.

Subsequently, on Oct. 24, the company provided financial guidance for Q3/07 of a loss of $0.06/sh in conjunction with an announcement that it would be issuing $125 million in convertible debt.

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The result was below our estimate of a loss of $0.03/sh and well below consensus estimates of a loss of $0.01/sh. We have now revised our costs (and Q3/07 and 2007FY EPS estimates to reflect financial guidance of $0.06/sh in Q3/07) to $680/oz cash costs in Q3/07 at the Bogoso Prestea Sulphides (the most likely cause of the poor financial result) from $571/oz which results in a loss of $0.06/sh.

GSC reported 40kozs sold compared to our estimate of 57kozs which is the result of lower than expected recoveries of 44% (due to poor flotation recoveries) and mill availability of only 69%. While GSC still expects design recoveries to be achieved by the end of 2007 as improvements to the flotation process and mill have been implemented and are bearing positive results, performance to date will negatively impact average recoveries for FY2007.

GSC expects Bogoso-Prestea to produce 125–150kozs, a downward revision of 18% from August 7 guidance of 160-175kozs. The company is forecasting cash operating costs of $550-$650/oz, revised +33% from $420-$480/oz, previously.

The company reported that design throughput at the BIOX facility was achieved at the end of third quarter, in line with our expectations However, mill availability was only 69% versus +90% expected. GSC has indicated that “several issues which negatively affected the mill availability were resolved in the third quarter” and the company expects to operate at 88% mill availability in Q4/07.

Kinross (K.TO, Outperform, Target Price C$18.00)

Kinross will report results on Nov. 7, with a conference call to be held at 5:30 PM EST. We are estimating Q3 EPS of $0.09 (revised from $0.11 to reflect mark to market on commodity prices and an adjustment to our G&A assumption for the quarter). Our 2007FY EPS estimate remains unchanged at $0.37. Production is expected to come in at 429kozs of gold equivalents in Q3/07 and 1.66mozs of gold equivalents for 2007FY. We are forecasting cash costs of $288/oz for Q3/07 and the year.

Yamana Gold (YRI.TO, Outperform, Target Price C$15.50)

Yamana will report third quarter results after market close on Nov. 7. We have revised our Q3/07 EPS (Adj.) to $0.20 from $0.15 and 2007 EPS to $0.71 from $0.67 as a result of marking to market for Q3 commodity prices.

On Oct. 15 YRI reported Q3 production results of 131.4kozs of gold and 33.5mlbs of copper, largely in-line with our estimate of 132.7kozs of gold and 36mlbs of copper. Production at Chapada was 49.7kozs of gold and 33.5mlbs of copper compared to our estimate of 48.1kozs and 36mlbs of copper, as the mine continues to perform well as it ramps up to full capacity, expected in Q4/07. At Jacobina, production came in at 17.3kozs compared to our estimate of 16kozs. However, YRI revised 2007FY forecasts downward for Jacobina from 75-80kozs to 60-65kozs, largely in-line with our previous estimates of 57kozs which have now been revised slightly upward to 63kozs.

For Q3/07 we are forecasting cash costs of $(265)/oz.

Goldcorp (G.TO, Outperform, Target Price C$37.00)

Goldcorp reports on November 9 before market open. We are forecasting Q3/07 EPS of $0.16 and $0.62 for the year (recently revised from $0.18/sh and $0.64) based on a mark-to market adjustment for commodity prices and a revision to our production estimates at Los Filos to reflect a slower ramp up than we had originally forecast in Q3/07.

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We are forecasting total gold production of 550kozs at total cash costs of $50/oz. For 2007 we are forecasting gold production of 2.3mozs at $109/oz. We expect costs at the Canadian operations, Red Lake Mines, Porcupine Joint Venture and the Musselwhite joint venture, combined approximately 47% of production, will reflect the 6% appreciation of the Canadian dollar, which will be somewhat offset by the ramp up in production at Los Filos.

Commencing Dec. 3, Goldcorp will be holding a mine tour to assets in Mexico including Los Filos, Peñasquito and San Dimas.

Meridian Gold (MNG.TO, Neutral, Target Price C$37.30)

Largely a non-event (given the impending closing of the company’s acquisition from Yamana), Meridian reported Q3 results on Oct. 23, after market close. The company reported EPS of $(0.13), compared to our estimate of $0.20 and consensus of $0.23. Defense costs related to the YRI acquisition impacted the quarter decreasing earnings by approximately $0.29.

MNG reported production of 78.3kozs of gold and 2.2mozs of silver slightly below our estimate of 86.5kozs of gold and 2.3mozs of silver. Costs for the quarter came in at $66/oz which was higher than our estimate of $(62)/oz, primarily the result of lower gold production (from lower grades) and lower by-product credits.

Valuations Eldorado - Valuation

Our Target price for Eldorado of C$7.50 is based on 2.0 times our cash adjusted NAV of $3.25, essentially the DCF of the mining assets with the net cash of $0.31 added at par. We start with a peak P/NAV multiple of 2.50 for premium growth oriented producers, to which we applied a 0.25 times discount to reflect development risk as Eldorado completes the expansion at Kisladag to 10Mtpa. The multiple was reduced a further 0.25 times to reflect legal risk and the impact of the on-going situation will have on the share price, until the legal issues at Kisladag are resolved.

Goldcorp - Valuation

Our Target price for Goldcorp of C$37.00 Target price, based on a target P/NAV multiple of 2.3 times to our cash adjusted NAV of $15.01 per share. Target P/NAV multiples have ranged from 1.0 to 3.0 times historically for gold producers in the Canadian coverage universe. We start with a peak multiple of 2.50 times to which we apply a 0.20 times development risk discount as the company looks to bring its most critical asset, Peñasquito, into production and as it takes Los Filos to full capacity.

Golden Star - Valuation

Our Target price for Golden Star of C$4.25 is based on 2.0 times P/NAV multiple to our cash adjusted NAV of $2.00, essentially the DCF of the mining assets. Our target multiple of 2.0 times is based on a current peak target P/NAV multiple of 2.50 times to which we applied a 0.25 times discount for development risk associated with the Bogoso Sulphide Plant and the development of Hwini-Butre and Benso deposits. The multiple was reduced a further 0.25 times to reflect operating risk due to the power restriction imposed by the government of Ghana and recent operating history

Kinross - Valuation

Our Target price for Kinross shares of $18.00 per share is based on a target P/NAV multiple of 2.3 times to our cash adjusted NAV of $7.05 per share. Target P/NAV multiples have ranged from 1.0 to 3.0 times historically for senior/near senior gold producers in the Canadian coverage universe. We start with a peak multiple of 2.50 times and we reduced our target P/NAV by 0.20 times for development risk as the company

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expands the Paracatu mine and begins production at Kupol and Kettle River and for the overhang related to operating in new mining jurisdictions such as Russia.

Meridian - Valuation

Our target price for Meridian at C$37.30 is based on 2.50 times our cash-adjusted NAV of $13.36 essentially the DCF of the mining assets, with the net cash of $2.13 added at par. We use a 2.50x target P/NAV multiple reflects the highest end of the range which as we consider Meridian a growth oriented premium producer.

Northgate - Valuation

Our Target price for Northgate Minerals of C$3.30 is based on 1.75 times our cash-adjusted NAV of $1.11/sh, essentially the DCF of the mining assets, with the net cash of $1.22/sh added at par. We use a 1.75 times target P/NAV multiple for Northgate starting with a peak multiple of 2.5 times discounted by 0.25 times to reflect development risk as 35% of the DCF is comprised of development projects, a further 0.25 times for short mine life and single asset risk and 0.25 times to reflect the precious-base metals hybrid.

Yamana - Valuation

Our Target price for Yamana shares of C$15.50 is based on 2.30 times our cash-adjusted NAV of $6.41/sh, essentially the DCF of the mining assets with the net cash of $0.02 added at par. We have revised our multiple to 2.30x (from 2.50x P/NAV previously) which is in-line with target multiples for similar growth-oriented large cap intermediates in our coverage universe.

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Northgate Minerals NGX.TO NEUTRAL* [V]

Company description

Northgate Minerals is a Canadian base gold and copper producer with its one operating asset located in British Columbia, Canada.

Price / Indexed Canada S&P/TSX Composite Index

2

3

4

5

Oct-06 Jan-07 Apr-07

Daily Oct 30, 2006 - Jun 29, 2007, 10/30/06 = C$3.43

Price Indexed Price Relative

ROIC / WACC

0%

20%

40%

60%

80%

100%

31 Dec 06 31 Dec 07 31 Dec 08ROIC WACC

REV / IC Op. Margin

0.00

0.20

0.40

0.60

0.80

1.00

31 Dec 06 31 Dec 07 31 Dec 08

0%5%10%15%20%25%30%35%40%

Rev/IC Op. Margin

Source: Company data, Credit Suisse estimates. On 10/29/07 the Canada S&P/TSX Composite Index index closed at 14,427.35.

Price (29 Oct 07) 2.97 (C$)

52 week high - low 4.42 - 2.55

Target price (12 months) 3.30 (C$)

Analyst's Coverage Universe Metals & Mining - Precious Metals

Weighting (vs. broad market) OVERWEIGHT* Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.

Year 12/06A 12/07E 12/08E

EPS (CS adj., US$) 0.48 0.28 0.28

P/E (x) 6.2 10.5 10.5

P/E rel. (%) 34.8 67.4 77.6

Revenue (US$ m) 411.3 361.5 363.9

EBITDA (US$ m) 160.2 139.0 161.5

IC (C$ m) — — —

OCFPS (US$) 0.66 0.46 0.54

ROIC — — —

P/OCF (x) 4.5 6.5 5.5

EV/EBITDA (current) 5.0 2.9 1.7

Number of shares (m) 254.2 Enterprise value (C$m) 359.28

Net debt (12/06A, US$ m) — Dividend (12/06A, US$) —

Net debt/Total cap. (12/06A) NM Dividend yield —

Valuation

Year 12/05A 12/06A 12/07E

Y/E closing price (C$) 1.84 3.45 2.97

Market cap. (C$ m) 393.09 874.79 754.97

End year net debt (C$ m) NM NM NM

Enterprise value (US$ m) 758.18 874.79 754.97

Key ratios

EV/EBITDA (current) 10.9 5.5 5.4

EV/IC (x) — — —

P/E at closing price (x) 9.4 7.2 10.5

Year 12/06A 12/07E 12/08E

Q1 EPS 0.10 0.06

Q2 0.22 0.08

Q3 0.07 0.04

Q4 0.09 0.10

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Golden Star GSC.TO NEUTRAL* [V]

Company description

Golden Star Resources is an intermediate North American gold producer with assets in Ghana.

Price / Indexed Canada S&P/TSX Composite Index

2

3

4

5

6

Oct-06 Jan-07 Apr-07 Jul-07

Daily Oct 30, 2006 - Oct 29, 2007, 10/30/06 = C$2.8

Price Indexed Price Relative

ROIC / WACC

0%

20%

40%

60%

80%

100%

31 Dec 06 31 Dec 07 31 Dec 08ROIC WACC

REV / IC Op. Margin

0.00

0.20

0.40

0.60

0.80

1.00

31 Dec 06 31 Dec 07 31 Dec 08

-25%-20%-15%-10%-5%0%5%10%15%

Rev/IC Op. Margin

Source: Company data, Credit Suisse estimates. On 10/29/07 the Canada S&P/TSX Composite Index index closed at 14,427.35.

Price (29 Oct 07) 3.52 (C$)

52 week high - low 5.54 - 2.78

Target price (12 months) 4.25 (C$)

Analyst's Coverage Universe Metals & Mining - Precious Metals

Weighting (vs. broad market) OVERWEIGHT* Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.

Year 12/06A 12/07E 12/08E

EPS (CS adj., US$) 0.31 -0.11 0.11

P/E (x) 12.0 NM 34.4

P/E rel. (%) 64.0 NM 215.7

Revenue (US$ m) 126.6 174.8 279.6

EBITDA (US$ m) 33.9 26.0 103.7

IC (C$ m) — — —

OCFPS (US$) 0.03 -0.05 0.31

ROIC — — —

P/OCF (x) 97.7 -67.3 11.9

EV/EBITDA (current) 27.1 36.4 9.3

Number of shares (m) 233.09 Enterprise value (C$m) 944.37

Net debt (12/06A, US$ m) 59.2 Dividend (12/06A, US$) —

Net debt/Total cap. (12/06A) 18.7% Dividend yield —

Valuation

Year 12/05A 12/06A 12/07E

Y/E closing price (C$) 2.65 2.93 3.52

Market cap. (C$ m) 544.79 609.19 820.48

End year net debt (C$ m) -18.6 59.2 84.1

Enterprise value (US$ m) 841.75 919.54 944.37

Key ratios

EV/EBITDA (current) 27.1 36.4 9.3

EV/IC (x) — — —

P/E at closing price (x) -24.1 8.2 -32.3

Year 12/06A 12/07E 12/08E

Q1 EPS 0.09 -0.01

Q2 0.06 -0.02

Q3 0.01 -0.06

Q4 0.15 -0.02

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Yamana Gold YRI.TO OUTPERFORM* [V]

Company description

Yamana is an intermediate Canadian gold producer with assets in Central and South America. Yamana also produces copper sourced solely from its Chapada mine.

Price / Indexed Canada S&P/TSX Composite Index

911131517

Oct-06 Jan-07 Apr-07

Daily Oct 30, 2006 - Jun 29, 2007, 10/30/06 = C$9.4

Price Indexed Price Relative

ROIC / WACC

0%

20%

40%

60%

80%

100%

31 Dec 06 31 Dec 07 31 Dec 08ROIC WACC

REV / IC Op. Margin

0.00

0.20

0.40

0.60

0.80

1.00

31 Dec 06 31 Dec 07 31 Dec 08

-80%-60%-40%-20%0%20%40%60%

Rev/IC Op. Margin

Source: Company data, Credit Suisse estimates. On 10/29/07 the Canada S&P/TSX Composite Index index closed at 14,427.35.

Price (29 Oct 07) 14.27 (C$)

52 week high - low 17.45 - 9.40

Target price (12 months) 15.50 (C$)

Analyst's Coverage Universe Metals & Mining - Precious Metals

Weighting (vs. broad market) OVERWEIGHT* Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.

Year 12/06A 12/07E 12/08E

EPS (CS adj., US$) -0.20 0.71 0.76

P/E (x) NM 20.1 18.9

P/E rel. (%) NM 134.3 134.8

Revenue (US$ m) 169.2 787.0 1,560.7

EBITDA (US$ m) -32.8 394.5 931.0

IC (C$ m) — — —

OCFPS (US$) -0.01 0.74 0.94

ROIC — — —

P/OCF (x) -1,205.1 19.2 15.2

EV/EBITDA (current) -165.0 15.3 5.9

Number of shares (m) 353.84 Enterprise value (C$m) 5,604.05

Net debt (12/06A, US$ m) NM Dividend (12/06A, US$) 0.02

Net debt/Total cap. (12/06A) NM Dividend yield 0.1%

Valuation

Year 12/05A 12/06A 12/07E

Y/E closing price (C$) 6.72 13.10 14.27

Market cap. (C$ m) 1,285.90 4,515.19 5,049.30

End year net debt (C$ m) NM NM NM

Enterprise value (US$ m) 5,441.91 4,515.19 5,049.30

Key ratios

EV/EBITDA (current) -3,399.1 -137.7 12.8

EV/IC (x) — — —

P/E at closing price (x) NM NM 20.1

Year 12/06A 12/07E 12/08E

Q1 EPS -0.03 0.12

Q2 -0.21 0.22

Q3 -0.04 0.20

Q4 0.02 0.17

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Goldcorp Inc. G.TO OUTPERFORM*

Company description

Goldcorp is a near senior gold producer operating in North, Latin and South America. The company also produces silver, copper and zinc as by-products.

Price / Indexed Canada S&P/TSX Composite Index

20

25

30

35

40

Oct-06 Jan-07 Apr-07 Jul-07

Daily Oct 30, 2006 - Oct 29, 2007, 10/30/06 = C$28.58

Price Indexed Price Relative

ROIC / WACC

0%1%2%3%4%5%6%7%

31 Dec 06 31 Dec 07 31 Dec 08ROIC WACC

REV / IC Op. Margin

0.00

0.05

0.10

0.15

0.20

0.25

31 Dec 06 31 Dec 07 31 Dec 08

0%5%10%15%20%25%30%35%40%

Rev/IC Op. Margin

Source: Company data, Credit Suisse estimates. On 10/29/07 the Canada S&P/TSX Composite Index index closed at 14,427.35.

Price (29 Oct 07) 32.87 (C$)

52 week high - low 35.71 - 22.80

Target price (12 months) 37.00 (C$)

Analyst's Coverage Universe Metals & Mining - Precious Metals

Weighting (vs. broad market) OVERWEIGHT* Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.

Year 12/06A 12/07E 12/08E

EPS (CS adj., US$) 0.93 0.62 0.86

P/E (x) 35.5 53.3 38.1

P/E rel. (%) 199.1 283.5 268.3

Revenue (US$ m) 1,710.0 2,434.2 2,839.5

EBITDA (US$ m) 967.6 1,165.7 1,485.2

IC (US$ m) 14,631.6 14,184.2 13,035.9

OCFPS (US$) 1.79 1.50 1.68

ROIC 3.5% 4.4% 6.0%

P/OCF (x) 15.8 22.0 19.5

EV/EBITDA (current) 25.4 20.9 16.0

Number of shares (m) 704.4 Enterprise value (US$m) 23,224.23

Net debt (12/06A, US$ m) 369.8 Dividend (12/06A, US$) 0.18

Net debt/Total cap. (12/06A) 52.6% Dividend yield 0.5%

Valuation

Year 12/05A 12/06A 12/07E

Y/E closing price (C$) 25.90 33.11 32.87

Market cap. (US$ m) 7,566.75 19,988.60 23,153.63

End year net debt (US$ m) NM 369.8 70.6

Enterprise value (US$ m) 23,686.12 20,358.40 23,224.23

Key ratios

EV/EBITDA (current) 41.2 21.0 19.9

EV/IC (x) — 1.4 1.6

P/E at closing price (x) 31.3 35.8 53.3

Year 12/06A 12/07E 12/08E

Q1 EPS 0.24 0.18

Q2 0.49 0.00

Q3 0.14 0.16

Q4 0.11 0.27

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Kinross Gold Corp. K.TO OUTPERFORM* [V]

Company description

The company is a near senior gold producer with operations in North, Latin and South America. The company also produces silver as a by-product.

Price / Indexed Canada S&P/TSX Composite Index

1012141618

Oct-06 Jan-07 Apr-07 Jul-07

Daily Oct 30, 2006 - Oct 29, 2007, 10/30/06 = C$14.46

Price Indexed Price Relative

ROIC / WACC

0%2%4%6%8%

10%12%14%

31 Dec 06 31 Dec 07 31 Dec 08ROIC WACC

REV / IC Op. Margin

0.00

0.20

0.40

0.60

0.80

1.00

31 Dec 06 31 Dec 07 31 Dec 08

0%5%10%15%20%25%30%35%

Rev/IC Op. Margin

Source: Company data, Credit Suisse estimates. On 10/29/07 the Canada S&P/TSX Composite Index index closed at 14,427.35.

Price (29 Oct 07) 18.30 (C$)

52 week high - low 18.30 - 11.75

Target price (12 months) 18.00 (C$)

Analyst's Coverage Universe Metals & Mining - Precious Metals

Weighting (vs. broad market) OVERWEIGHT* Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.

Year 12/06A 12/07E 12/08E

EPS (CS adj., US$) 0.46 0.37 0.59

P/E (x) 42.0 52.2 32.5

P/E rel. (%) 224.4 314.5 218.2

Revenue (US$ m) 905.6 1,122.7 1,305.1

EBITDA (US$ m) 300.5 439.4 546.7

IC (US$ m) 1,176.9 2,984.1 3,193.4

OCFPS (US$) 0.81 0.68 0.91

ROIC 12.7% 7.7% 11.5%

P/OCF (x) 14.7 28.1 21.1

EV/EBITDA (current) 23.2 15.2 12.1

Number of shares (m) 591.6 Enterprise value (US$m) 6,682.13

Net debt (12/06A, US$ m) — Dividend (12/06A, US$) —

Net debt/Total cap. (12/06A) NM Dividend yield —

Valuation

Year 12/05A 12/06A 12/07E

Y/E closing price (C$) 10.74 13.82 18.30

Market cap. (US$ m) — 4,301.34 6,959.74

End year net debt (US$ m) NM NM NM

Enterprise value (US$ m) 6,959.74 6,959.74 6,682.13

Key ratios

EV/EBITDA (current) 23.2 15.2 12.1

EV/IC (x) 5.7 2.2

P/E at closing price (x) 25.9 52.2

Year 12/06A 12/07E 12/08E

Q1 EPS 0.03 0.10

Q2 0.19 0.09

Q3 0.14 0.09

Q4 0.11 0.09

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Companies Mentioned (Price as of 29 Oct 07) Barrick Gold Corp. (ABX, $44.06, NEUTRAL, TP $34.00, MARKET WEIGHT) Eldorado Gold (ELD.TO, C$6.70, OUTPERFORM [V], TP C$7.50, OVERWEIGHT) Goldcorp Inc. (G.TO, C$32.87, OUTPERFORM, TP C$37.00, OVERWEIGHT) Golden Star (GSC.TO, C$3.52, NEUTRAL [V], TP C$4.25, OVERWEIGHT) Kinross Gold Corp. (K.TO, C$18.30, OUTPERFORM [V], TP C$18.00, OVERWEIGHT) Meridian Gold Inc. (MNG.TO, C$38.82, NEUTRAL, TP C$37.30, OVERWEIGHT) Newmont Mining (NEM, $47.67, OUTPERFORM, TP $46.00, MARKET WEIGHT) Northgate Minerals (NGX.TO, C$2.97, NEUTRAL [V], TP C$3.30, OVERWEIGHT) Yamana Gold (YRI.TO, C$14.27, OUTPERFORM [V], TP C$15.50, OVERWEIGHT)

Disclosure Appendix

Important Global Disclosures I, Anita Soni, P. Eng., CFA, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

See the Companies Mentioned section for full company names. 3-Year Price, Target Price and Rating Change History Chart for G.TO

11-Oct-07

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G.TO Closing Price Target Price Initiation/ Date Price (CAD) Price (CAD) Rating Assumption 10/11/07 31.3 37 OUTPERFORM X

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3-Year Price, Target Price and Rating Change History Chart for GSC.TO

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GSC.TO Closing Price Target Price Initiation/ Date Price (CAD) Price (CAD) Rating Assumption 6/7/07 4.09 4.75 NEUTRAL X 8/9/07 3.72 4.5 10/4/07 3.95 4.25

3-Year Price, Target Price and Rating Change History Chart for K.TO

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K.TO Closing Price Target Price Initiation/ Date Price (CAD) Price (CAD) Rating Assumption 10/11/07 15.66 18 OUTPERFORM X

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3-Year Price, Target Price and Rating Change History Chart for NGX.TO

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NGX.TO Closing Price Target Price Initiation/ Date Price (CAD) Price (CAD) Rating Assumption 8/15/07 3.15 3.75 NEUTRAL X 9/19/07 2.74 3.3

3-Year Price, Target Price and Rating Change History Chart for YRI.TO

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YRI.TO Closing Price Target Price Initiation/ Date Price (CAD) Price (CAD) Rating Assumption 7/12/07 12.82 19 OUTPERFORM X 8/23/07 10.57 18 9/20/07 12.65 17 10/23/07 13.38 15.5

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities. Analysts’ stock ratings are defined as follows***: Outperform: The stock’s total return is expected to exceed the industry average* by at least 10-15% (or more, depending on perceived risk) over the next 12 months. Neutral: The stock’s total return is expected to be in line with the industry average* (range of ±10%) over the next 12 months. Underperform**: The stock’s total return is expected to underperform the industry average* by 10-15% or more over the next 12 months.

*The industry average refers to the average total return of the analyst's industry coverage universe (except with respect to Asia/Pacific, Latin America and Emerging Markets, where stock ratings are relative to the relevant country index.

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**In an effort to achieve a more balanced distribution of stock ratings, the Firm has requested that analysts maintain at least 15% of their rated coverage universe as Underperform. This guideline is subject to change depending on several factors, including general market conditions. ***For Australian and New Zealand stocks a 7.5% threshold replaces the 10% level in all three rating definitions, with a required equity return overlay applied.

Restricted: In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

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See the Companies Mentioned section for full company names. Price Target: (12 months) for (G.TO) Method: Our target price of C$37.00 Target price, based on a target P/NAV multiple of 2.3 times to our cash adjusted NAV of $15.01 per share. Target P/NAV multiples have ranged from 1.0 to 3.0 times historically for gold producers in the Canadian coverage universe. We start with a peak multiple of 2.50 times to which we apply a 0.20 times development risk discount as the company looks to bring its most critical asset, Peñasquito, into production and as it takes Los Filos to full capacity. Risks: We believe there are several risks to Goldcorp’s achievement of our C$37.00 target price. Goldcorp is subject to commodity price and foreign exchange risk as fluctuations in the gold price or foreign exchange rates will impact Goldcorp’s profitability. Goldcorp is subject to inflationary pressures particularly for fuel, consumables, equipment and labour. Fluctuations in ore grade and recovery rates or changes to the mining sequence would impact production and cost forecasts. Goldcorp is also exposed to development risk as it brings the Peñasquito mine into production and as it takes Los Filos to full capacity. Price Target: (12 months) for (GSC.TO) Method: Our target price of C$4.25 for Golden Star is based on our cash adjusted NAV (net asset value) of US $2.00 multiplied by our target P/NAV (price/net asset value) multiple of 2.00x. Our target multiple of 2.00x was based on a current peak target P/NAV multiple of 2.50x to which we applied a 0.25x discount for development risk associated with the Bogoso sulphide expansion and the development of Hwini-Butre and Benso deposits and a further 0.25x to reflect operating risk due to the power restriction imposed by the government of Ghana and recent operating history. Risks: We believe there are several risks to Golden Star’s achievement of our C$4.25 target price. Additional rationing of power by the government of Ghana or a delay in the commissioning of the 100MW power station would impact Golden Star’s production. GSC has had illegal mining occur on its properties in the past and may face difficulties in generating sufficient operating cash flows to fully fund its exploration and development requirements. The company is also subject to development and permitting risks as it brings its Hwini-Butre and Benso projects into production. Golden Star is also subject to commodity price, foreign exchange risk and inflationary pressures on its costs. The company primarily operates in Ghana and is subject to the regulations in Ghana. Price Target: (12 months) for (K.TO) Method: Our target price of $18.00 per share is based on a target P/NAV multiple of 2.3 times to our cash adjusted NAV of $7.05 per share. Target P/NAV multiples have ranged from 1.0 to 3.0 times historically for senior/near senior gold producers in the Canadian coverage universe. We start with a peak multiple of 2.50 times and we reduced our target P/NAV by 0.20 times for development risk as the company expands the Paracatu mine and begins production at Kupol and Kettle River and for the overhang related to operating in new mining jurisdictions such as Russia.

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Risks: We believe there are several risks to Kinross’ achievement of our C$18.00 target price. Kinross is subject to commodity price and foreign exchange risk as fluctuations in the gold price or foreign exchange rates will impact Kinross’ profitability. Kinross is subject to inflationary pressures particularly for fuel, consumables, equipment and labour. Fluctuations in ore grade and recovery rates or changes to the mining sequence would impact production and cost forecasts. Kinross is also exposed to development risk as as the company expands the Paracatu mine and begins production at Kettle River. Price Target: (12 months) for (NGX.TO) Method: Our target price of C$3.30 is based on 1.75 times our cash-adjusted NAV of $1.11/sh, essentially the DCF of the mining assets, with the net cash of $1.22/sh added at par. Current P/NAV multiples for North American gold producers range from 1.0 to 2.5 times. We use a 1.75 times target P/NAV multiple for Northgate starting with a peak multiple of 2.5 times discounted by 0.25 times to reflect development risk as 35% of the DCF is comprised of development projects, a further 0.25 times for short mine life and single asset risk and 0.25 times to reflect the precious-base metals hybrid. Risks: We believe there are several risks to Northgate’s achievement of our target price of C$3.30. Northgate is subject to commodity price and foreign exchange risk as fluctuations in the gold and copper price and foreign exchange rates may impact Northgate’s profitability. Northgate is subject to inflationary pressures particularly for fuel, consumables, equipment and labour. Fluctuations in ore grade and recovery rates or changes to the mining sequence would impact production and cost forecasts. Northgate is also exposed to development risk as it tries to advance its exploration projects. Price Target: (12 months) for (YRI.TO) Method: Our Target price of C$15.50 is based on 2.30 times our cash-adjusted NAV of $6.41, essentially the DCF of the mining assets with the net cash of $0.02 added at par. We have revised our multiple to 2.30x (from 2.50x P/NAV previously) which is in-line with target multiples for similar growth oriented larger intermediates. We had previously stated that we would apply a 2.25x to reflect the increased copper exposure from Agua Rica. However, YRI has now disclosed that it does not intend to develop the project as a standalone asset and intends monetize its interest in the Agua Rica project. Risks: We believe there are several risks to Yamana's achievement our C$15.50 target price. Yamana is subject to commodity price and foreign exchange risk as fluctuations in the gold, copper and foreign exchange rates will impact Yamana's profitability. Yamana is subject to inflationary pressures particularly for fuel, consumables, equipment and labour. Fluctuations in ore grade or recovery rates or changes to the mining sequence would impact production and costs forecasts. Yamana is exposed to development and permitting risk as it brings into production the Gualcamayo and San Andrés mines as well as planned the expansion at Jacobina. Yamana is also exposed to political risk. It currently operates in Brazil, Argentina and Honduras changes in regulations or shifts in political attitudes may have an impact on the company's operations.

See the Companies Mentioned section for full company names. The subject company (G.TO, GSC.TO, K.TO, NGX.TO, YRI.TO) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (G.TO, K.TO, YRI.TO) within the past 12 months. Credit Suisse provided non-investment banking services, which may include Sales and Trading services, to the subject company (G.TO, GSC.TO, NGX.TO) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (G.TO, K.TO, YRI.TO) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (GSC.TO, NGX.TO) within the past 12 months. Important Regional Disclosures The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (G.TO, GSC.TO, K.TO, NGX.TO, YRI.TO) within the past 12 months.

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For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683. Disclaimers continue on next page.

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Q307 Earnings Previewv4.doc

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abcGlobal Research

We find no compelling evidence that the sector NPV multiple has compressed due to rising input costs or lagging share price performance relative to gold or base metals equities

There is some evidence to indicate that the multiple has softened when the gold price has risen above USD700/oz, indicating potential investor caution

Our SVM model indicates that the gold equities are currently discounting a gold price very close to spot

It appears to have become fashionable to blame the reasonably poor performance of gold equities on a decline, or compression, of the “NPV multiple.” Investors, so the theory goes, are no longer willing to pay a high “premium” for gold equities (relative to their underlying NPV valuation) because of rising input costs and poor share price performance relative to the gold price. This last argument is completely circular, as it essentially claims that poor share price performance is due to poor share price performance.

An analysis of the “NPV premium” using spot gold prices does not readily lend itself to this conclusion. While the “NPV premium” is currently lower than the average over the past 15 months, it would appear that a gold price in excess of USD700/oz is mildly correlated with a lower premium. This would argue that any “multiple compression” is due to changing investor attitudes toward the gold price, rather than any secular shift in investor sentiment toward gold equity valuation.

Based on our Strategic Option Valuation (SVM) real options model, the gold equities are discounting a gold price near spot and, if anything, the sector’s valuation vis-à-vis the gold price has improved. This does not mean, however, that the industry should not be concerned about valuation. Over the long term, we have shown a strong correlation between high ROIC and share price performance, but despite the rising gold price, we expect the sector ROIC to decline this year.

Natural Resources & Energy Precious Metals

Precious Metals Equities The “multiple” fantasy

23 October 2007 Victor Flores, CFA Analyst HSBC Securities (USA) Inc. +1 212 525 3053 [email protected]

Erica Brailey Analyst HSBC Securities (USA) Inc. +1 212 525 7669 [email protected]

Issuer of report: HSBC Securities (USA) Inc

Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it 85

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Gold equities: Ratings,12-month target prices, and hurdle rates

Company

Ticker

Price (USD/sh)

TP (USD/sh)

SVM (USD/sh)

P/SVM (x)

Pot total ret (%) Country

Risk free rate (%)

Risk prem (%)

Volatility adj (%)

Min (%)

Max (%) Rating

Agnico-Eagle AEM.N 53.61 52.00 32.02 1.67 -3.0 Canada 4.50 4.50 10 -1.00 19.00 N (V)AngloGold AU.N 43.59 55.00 62.93 0.69 26.2 South Africa 7.60 5.50 10 3.10 23.10 OW (V)Barrick ABX.N 41.71 41.00 39.17 1.06 -1.7 Canada 4.50 4.50 10 -1.00 19.00 N (V)Buenaventura BVN.N 52.54 42.00 43.52 1.21 -20.1 US 4.80 3.50 10 -1.70 18.30 UW (V)Centerra CG.TO 12.53 12.00 15.18 0.83 -4.2 Canada 4.50 4.50 10 -1.00 19.00 OW(V)DRD Gold DROOY.O 7.90 7.50 9.94 0.79 -5.1 South Africa 7.60 5.50 10 3.10 23.10 UW (V)Freeport FCX.N 108.90 67.00 83.85 1.30 -38.5 US 4.80 3.50 10 -1.70 18.30 UW (V)Gold Fields GFI.N 17.83 20.00 19.94 0.89 12.2 South Africa 7.60 5.50 10 3.10 23.10 N (V)Goldcorp GG.N 31.89 28.00 26.65 1.20 -12.2 Canada 4.50 4.50 10 -1.00 19.00 UW (V)Harmony HMY.N 9.54 12.00 12.65 0.75 25.8 South Africa 7.60 5.50 10 3.10 23.10 N (V)IAMGOLD IAG.N 8.37 7.00 8.65 0.97 -16.4 Canada 4.50 4.50 10 -1.00 19.00 UW (V)Kinross KGC.N 16.84 16.00 15.99 1.05 -5.0 Canada 4.50 4.50 10 -1.00 19.00 N (V)Lihir* LHG.AX 3.79 3.00 2.35 1.61 -29.4 Australia 4.80 4.00 10 -1.20 18.80 UW (V)Meridian MDG.N 38.28 34.00 34.58 1.11 -11.2 Canada 4.50 4.50 10 -1.00 19.00 N (V)Newcrest* NCM.AX 26.67 26.00 21.08 1.27 -13.1 Australia 4.80 4.00 10 -1.20 18.80 UW (V)Newmont NEM.N 45.67 45.00 50.19 0.91 -1.5 US 4.80 3.50 10 -1.70 18.30 N (V)Peter Hambro** POG.L 26.64 13.00 46.72 0.57 0.1 Great Britain 5.20 3.50 10 -1.30 18.70 N (V)Randgold GOLD.O 34.53 32.00 36.13 0.96 -7.3 Great Britain 5.20 3.50 10 -1.30 18.70 N (V)Royal Gold RGLD.O 32.43 34.00 39.18 0.83 4.8 US 4.80 3.50 10 -1.70 18.30 N (V)Sector avg. 1.01 * Target in AUD. ** Target in GBP. Note: Based on a gold price of USD766.00/oz. Priced as of 10/19/2007. HSBC ratings: OW = Overweight, N = Neutral, UW = Underweight, V = Volatile. Source: HSBC

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Summary It appears to have become fashionable to talk about “multiple compression” that has affected gold equities as the gold price rallies to new highs. In a recent presentation, Barrick Gold CEO Greg Wilkins referred to “multiple compression” as one of the key issues facing the company.

As in years past, the so-called NPV multiple that gold companies trade on has become such an important topic that it drives discussions about relative valuation and corporate strategy, and is used as the basis to validate corporate transactions, including acquisitions, disposals, and IPOs.

When we refer to “NPV multiple” in quotation marks and use the term “so-called,” this does not mean that we dispute that gold companies’ shares trade on a premium to their NPV (and, hence, the multiple). Rather, we question whether this figure should be given so much importance by the market, especially when it is such a subjective – ineffable, we would say – figure.

Such is the metaphysical allure of the “multiple” that the debate now has shifted from whether the multiple should exist (why, argue the critics, should gold stocks get multiples when base metals companies’ shares do not?), to how it should be calculated (we have yet to find a consistent formula), to how large it should be (another

Putting paid to a circular argument

The argument that gold equities have “de-rated” because share prices have not kept up with the rising gold price is like arguing that the shares have underperformed because they have underperformed We believe that the valuation of gold equities has been impacted by rising input costs and corporate strategies distorted by the “NPV multiple,” although the rising gold price could be leading to some investor caution We find no evidence of “multiple compression” based on an analysis of NPV multiples, which are only slightly below average, and of our SVM real options model, which indicates that shares are broadly discounting the current gold price

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source for bias), to whether it is shrinking – and why. In this report, we answer the last question by treading briefly over the first few questions (which have been the subject of our previous research) to answer the last one: Is the “premium” that gold equities seem to enjoy fading – and why – and is there anything that the industry can to do retain its valuation?

Should gold equities trade on a premium to NPV? The only reason that this question is asked is that, based on the assumptions that are most commonly used, it appears that gold equities trade at a multiple to their NPV, while base metals companies’ shares do not. So right away there is an implied injustice that can only be explained by lambasting “irrational” gold investors for affording a “premium” to an industry that has a poor track record of investing its investors’ capital.

But this debate is based on two fundamental – and potentially flawed – assumptions. The first is that both base metals companies and gold companies should both be valued using NPV analysis. The second is that this is actually how investors value these companies.

The only reason that both base metals and gold companies are both valued using NPV analysis is that both are natural resource-based investments, and that is how it has always been done. But why isn’t this assumption ever questioned? The mere fact that publicly-traded gold mining companies’ shares trade at a premium to their NPV valuation (and have for at least the 20 years we have been following this sector) should provide a strong incentive to find some other way of valuing these companies, above and beyond calculating an NPV and tacking a “multiple” to rectify the disparity between valuation and share price.

The persistence of the disparity between share prices and valuations in gold equities also provides some support for the notion that the market values these companies differently, as we have argued for some time. The notion of the “NPV multiple” has become so entrenched in the ethos of the gold sector that there is little debate about the way in which the market values these companies. But it seems disingenuous not to question this assumption when there are many other (nonmining) sectors in which companies trade on a premium to their underlying discounted cash flow value. The reason that investors in other sectors do not spend endless hours debating the “NPV premium,” in our opinion, is that they do not particularly care about this valuation metric and have chosen another means of valuing these companies. The lesson we take from other industries is that the “NPV multiple” exists and does not really matter a great deal. The only reason it has taken on so much importance in the gold industry, we believe, is that analysts and investors continue valuing the companies using NPV analysis.

As we have shown in our research, the NPV multiple has persisted over time, which implies that investors do not use NPV as the fundamental metric of a gold company’s valuation. If they did, the disparity between NPV valuation and company valuation would have been long ago arbitraged (see our report, Standing on gold mine, November 2004). We have argued that investors implicitly value gold companies as a series of real options, or at the very least value the companies using NPV metrics and then afford additional value for the real options embedded in these companies. This argument would appear to fall flat, given that base metals companies, as natural resource producers, also have many of the embedded real options that gold companies have. For instance, most base metals companies also hold the real option to expand production and to

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extract material that has been converted into reserves by virtue of rising commodity prices. But as we have shown in our research (see The Senior Gold Book: How the leopard got its spots, January 2006), we believe that the difference can be explained by the different way in which investors view gold and base metals. In summary, investors value gold companies as they would value options on equities, where the price of the commodity can rise without limit. The valuation of base metals, on the other hand, implies mean-reversion, and options on mean-reverting systems are valued differently. Our conclusion is that there is no gold “premium” or base metals “discount;” rather, the market treats gold and base metals differently because they are inherently different. This nuance is lost on those who attempt to value both types of companies using NPV valuation.

How should the premium to NPV be calculated? The truth, in our view, is that there is no good answer to this question. The problem stems not only from the base-case assumptions that are used to calculate the NPV, but also from the assumptions that are used to derive the “multiple.”

Two critical assumptions go into the NPV calculation: the gold price and the discount rate. The first is (despite all the scientific effort that goes into its analysis) by its very nature a subjective assumption and, unfortunately, subject to significant forecasting error. Any multiyear, single-point gold price assumption has, by definition, an improbably low possibility of being correct. Therefore, the entire NPV construct relies on an assumption that is incorrect. If the spot gold price is higher than the gold price assumption used in the NPV analysis, it is only natural that the shares will trade on a premium.

The following chart shows the problem with using gold price forecasts to calculate NPVs. The chart

shows HSBC’s gold price forecast at the beginning of each year, back to 2000. It is evident from the chart that the long-term gold price forecast is strongly tied to the prevailing spot gold price. As the gold price rose, so did (eventually) HSBC’s forecast. This is one of the reasons we prefer to use the spot gold price to track the “NPV premium.”

Gold and HSBC gold price forecasts

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007e 2008e

Gold price Jan 2000 Jan 2001 Jan 2002 Jan 2003Jan 2004 Jan 2005 Jan 2006 Jan 2007

Source: HSBC

The second key assumption is the discount rate. Typically, analysts have used low discount rates, because this tends to increase the NPV and therefore reduce the premium. Various arguments (none, that we can tell, grounded in economic reality) have been used to defend the low discount rate used in gold company NPV analysis. It is, admittedly, an awkward thing to calculate a proper risk-adjusted discount rate for gold equities, derive an NPV, and then conclude triumphantly that the sector is attractive even though it is trading at a significant premium to NPV. In our opinion, it is no wonder then that generalist investors, accustomed to cogent arguments for identifying undervalued sectors, are uninterested in gold equities.

Having addressed the base-case assumptions and how they complicate the calculation of the “multiple,” we then have to consider the subjective factors that might be included in the calculation. These have variously been divided into two broad categories, geological and

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managerial. We find the first of the two easier to assess, as it generally involves the potential that companies have in terms of exploration at existing operations and to discover new deposits. These items can be difficult to value using NPV techniques, and the market makes up for this by intuitively applying additional value. The second is a bit trickier, as it is highly subjective. A management team that to one analyst appears strong may be considered merely average to another.

The big problem with both the geologic potential and management acuity arguments is that they are equally valid when applied to base metals companies. In the current environment, one could argue that the base-metals companies have even greater potential to develop new projects (as base metals have risen by more than gold), and that management teams have arguably done a better job (at least as measured by share price performance and returns to shareholders in the form of special dividends and share buybacks).

What we regard as the inevitable result of combining variable assumptions and subjective factors to the valuation of gold equities has been to retard the development of the industry and – to put it bluntly – to make the valuation of companies in this sector a potentially misleading exercise. Even assuming that the gold price forecast and discount rate calculation follow a relatively scientific process, this all comes to naught when it comes to assigning the “multiple.” We believe that the “multiple” has become a tool for favoring one company over another for mere pecuniary gain.

How large should the ‘premium’ be? Having largely avoided the issue of how the multiple should be calculated, it would seem even more difficult to answer the question of how large

the “premium” should be. But the simple answer is that it doesn’t really matter; the “premium” can be as large as it has to be to justify the company’s valuation in the marketplace. If we part from the assumption that the market values gold companies using NPV valuation, and then assigns a “multiple” to give value to certain unquantifiable (by NPV techniques) factors, then the issue of the size of the premium becomes important. If, however, we begin by assuming that the market does not use NPVs to value the gold equities, then the size of the premium becomes unimportant.

Consider the valuation of the gold equities when the gold price was very low, ie the period 1999-2001. Based on the then-prevailing gold price, below USD300/oz, the NPV for most companies was very low, and hence the “premium” was very high. Thus, gold equities appeared expensive, and the logical thing to do would have been to sell them. Subsequently, gold equities rallied strongly, despite the high “premium” on which they were trading. This implies strongly to us that the market was not valuing the gold equities on the basis of NPV – or at least it implies that, if they were, some investors recognized that the high “premium” should not be a deterrent to investment in the sector.

Is the ‘NPV multiple’ shrinking, and why? The evidence on the issue of “multiple compression” is mixed. At the beginning of 2006, when the gold price was less than USD500/oz, the sector NPV multiple – based on spot gold pricing – was about 1.5x. Currently, with a gold price of about USD750/oz, the NPV multiple stands, based on our estimates, at 1.3x. Given that the “multiple” declined significantly when the gold price rose above USD700/oz in May 2006 (falling to about 1.1x), and again in August of 2007 before the gold price rallied, one could argue that the NPV multiple has declined when the gold price

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has risen above USD700/oz, perhaps because investors assume that the gold price is not sustainable.

Gold sector P/NPV multiple

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Mar-06 Jun-06 Sep-06 Nov-06 Feb-07 May-07 Aug-07

P/NPV (x)

Source: HSBC

But the decline in the multiple in July and August this year can be more correctly attributed to a selloff in gold equities that appears unrelated to the movements in the gold price (remember that the gold equities corrected by about 20% from the end of June to the middle of August this year, against a scant USD30/oz fall in the gold price). The multiple has since then risen in tandem with the shares. Moreover, in June this year, the multiple rose to more than 1.5x, handily exceeding the average multiple of 1.38x (spot basis over the past 15 months).

If we plot the sector “NPV premium” against the gold price, we see that there is little correlation between the two. In early 2006, the multiple declined as the price rose, implying that a declining multiple is merely a function of changing attitudes toward gold among investors (ie they are assuming that gold has peaked) and not a due to a view that the sector’s fundamentals were deteriorating. But as we can see from the following chart, the premium rebounded rapidly in the third quarter of 2006, even though the gold price did not regain all of its lost ground (although perhaps investors were discounting the possibility that it would). Interestingly to us, gold equities were largely range-bound between June last year and August this year, and so was the “NPV

premium,” which, after recovering in August 2006, stayed in a range between 1.30 and 1.55x.

Sector P/NPV vs. gold price

500

550

600

650

700

750

800

Mar-06 Jun-06 Sep-06 Nov-07 Feb-08 May-07 Aug-071.00

1.10

1.20

1.30

1.40

1.50

1.60

Gold Price (USD/oz) P/NPV (x) - RHS

Source: HSBC, Bloomberg

The severe decline in the “NPV premium” in July and August this year could be attributed to a sector “de-rating,” but as noted, we believe this was merely a reflection of the sharp selloff in the shares, which it appears were being sold almost indiscriminately (and, in our view, as a source of liquidity). If this is true, then the improving trend in the “NPV premium” that we observed beginning in late August could well prevail, putting paid to the idea that the sector premium has been permanently impaired.

Conclusion The mere fact that some gold companies are fretting publicly about a “de-rating” indicates to us that there is some underlying concern about the valuation of the sector (in other words, where there’s smoke, there is fire). If there is a possibility that the “NPV premium” will decline, then there must be a reason for it.

The most oft-cited factor for a “de-rating” is that investors are unhappy with the performance of the gold equities relative to both the gold price and the price of base metals equities. Regarding the former, there is no evidence that the so-called beta to the gold price has declined (see The Senior Gold Book – A walk on the wild side, July 2006). With respect to the latter, it is difficult to argue that gold equities should have performed as well

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as base-metals equities, given that the increase in base metals has far outpaced the increase in the gold price.

Moreover, when we compare the P/NPV valuation to our own proprietary SVM real options model, we find that the valuation of the sector has, based on our model, improved over the past years, to the point where the shares are now on a premium. We would therefore argue that the sector has not de-rated at all.

P/NPV and P/SVM: No evidence of a de-rating here

1.00

1.20

1.40

1.60

Mar-06 Aug-06 Dec-06 May-07 Oct-070.60

0.80

1.00

1.20

P/NPV (x) P/SVM (x) - RHS

Source: HSBC

But this does not mean that the industry should not be concerned. As we pointed out in our report, US Metals & Mining: For those about to ROIC…we salute you, 9 May 2007), we believe that long-term share price performance in the gold sector is directly related to the return on invested capital. We showed that those companies that have outperformed (defined by share price returns) over the years have been characterized by delivering consistently high ROIC.

Given industry cost trends and a penchant for paying high premiums to make acquisitions (the latter based on the “NPV multiple” approach to valuation), the sector as a whole has not delivered high returns on invested capital. Moreover, we estimate that, even though the gold price this year is on track to exceed last year’s average by some 12%, the sector ROIC will decline to 9.9% from 12.1%.

Sector ROIC vs. gold price

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000 2001 2002 2003 2004 2005 2006 2007 2008200

300

400

500

600

700

ROIC (%) Gold price (USD/oz) - RHS

Source: HSBC

The industry’s worries about the “NPV multiple” and whether it is rising or falling also have the potential, in our view, to cloud a company’s judgment when it comes to corporate strategy. As we showed in The Senior Gold Book: A problem of logarithmic proportion (August 2006), the industry will find it difficult, in our view, to sustain large companies, given the paucity of sufficiently large gold deposits. But the fear of losing the “multiple” is preventing certain companies from pursuing diversification strategies that may be needed to sustain them over the long term. We have argued that base-metals companies are unconcerned with their “multiple” because they are highly profitable and have the ability to provide returns to shareholders (through special dividends or share buybacks). Gold companies, on the other hand, remain worried about their “multiple” because they continue to depend on the capital markets. We await the emergence of a gold company that is bold enough to trade its “multiple” in exchange for long-term sustainability.

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Disclosure appendix Analyst certification The following analyst(s), who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Victor Flores and Erica Brailey

Important disclosures Stock ratings and basis for financial analysis HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which depend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations. Given these differences, HSBC has two principal aims in its equity research: 1) to identify long-term investment opportunities based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12 month time horizon; and 2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative, technical or event-driven techniques on a 0-3 month time horizon and which may differ from our long-term investment rating. HSBC has assigned ratings for its long-term investment opportunities as described below.

This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when HSBC publishes a short-term trading idea the stocks to which these relate are identified on the website at www.hsbcnet.com/research. Details of these short-term investment opportunities can be found under the Reports section of this website.

HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's existing holdings and other considerations. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research report. In addition, because research reports contain more complete information concerning the analysts' views, investors should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not be used or relied on in isolation as investment advice.

Rating definitions for long-term investment opportunities Stock ratings HSBC assigns ratings to its stocks in this sector on the following basis:

For each stock we set a required rate of return calculated from the risk free rate for that stock's domestic, or as appropriate, regional market and the relevant equity risk premium established by our strategy team. The price target for a stock represents the value the analyst expects the stock to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the implied return must exceed the required return by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock must be expected to underperform its required return by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as Volatile*). Stocks between these bands are classified as Neutral.

Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage, change of volatility status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review, expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily triggering a rating change.

*A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12 months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However,

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stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past month's average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however, volatility has to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.

Prior to this, from 7 June 2005 HSBC applied a ratings structure which ranked the stocks according to their notional target price vs current market price and then categorised (approximately) the top 40% as Overweight, the next 40% as Neutral and the last 20% as Underweight. The performance horizon is 2 years. The notional target price was defined as the mid-point of the analysts' valuation for a stock.

From 15 November 2004 to 7 June 2005, HSBC carried no ratings and concentrated on long-term thematic reports which identified themes and trends in industries, but did not make a conclusion as to the investment action that potential investors should take.

Prior to 15 November 2004, HSBC's ratings system was based upon a two-stage recommendation structure: a combination of the analysts' view on the stock relative to its sector and the sector call relative to the market, together giving a view on the stock relative to the market. The sector call was the responsibility of the strategy team, set in co-operation with the analysts. For other companies, HSBC showed a recommendation relative to the market. The performance horizon was 6-12 months. The target price was the level the stock should have traded at if the market accepted the analysts' view of the stock.

Rating distribution for long-term investment opportunities As of 22 October 2007, the distribution of all ratings published is as follows: Overweight (Buy) 50% (25% of these provided with Investment Banking Services)

Neutral (Hold) 31% (23% of these provided with Investment Banking Services)

Underweight (Sell) 19% (15% of these provided with Investment Banking Services)

Analysts are paid in part by reference to the profitability of HSBC which includes investment banking revenues.

For disclosures in respect of any company, please see the most recently published report on that company available at www.hsbcnet.com/research.

* HSBC Legal Entities are listed in the Disclaimer below.

Additional disclosures 1 This report is dated as at 23 October 2007. 2 All market data included in this report are dated as at close 19 October 2007, unless otherwise indicated in the report. 3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its

Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Chinese Wall procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

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Disclaimer * Legal entities as at 22 August 2007 'UAE' HSBC Bank Middle East Limited, Dubai; 'HK' The Hongkong and Shanghai Banking Corporation Limited, Hong Kong; 'TW' HSBC Securities (Taiwan) Corporation Limited; 'CA' HSBC Securities (Canada) Inc, Toronto; HSBC Bank, Paris branch; HSBC France; 'DE' HSBC Trinkaus & Burkhardt AG, Dusseldorf; 000 HSBC Bank (RR), Moscow; 'IN' HSBC Securities and Capital Markets (India) Private Limited, Mumbai; 'JP' HSBC Securities (Japan) Limited, Tokyo; 'EG' HSBC Securities Egypt S.A.E., Cairo; 'CN' HSBC Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai Banking Corporation Limited, Singapore branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; 'GR' HSBC Pantelakis Securities S.A., Athens; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv, 'US' HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler A.S., Istanbul; HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, HSBC Bank Brasil S.A. - Banco Múltiplo.

Issuer of report HSBC Securities (USA) Inc 452 Fifth Avenue, 9th floor HSBC Tower New York, NY 10018, USA Telephone: +1 212 525 5000 Fax: +1 212 525 0354 Website: www.hsbcnet.com/research

This material was prepared and is being distributed by HSBC Securities (USA) Inc., ("HSI") a member of the HSBC Group, the NYSE and the NASD. This material is for the information of clients of HSI and is not for publication to other persons, whether through the press or by other means. It is based on information from sources, which HSI believes to be reliable but it is not guaranteed as to the accuracy or completeness. This material is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The opinions contained within the report are based upon publicly available information at the time of publication and are subject to change without notice. Employees of HSBC and its affiliates not involved in the preparation of this report may have positions in the securities mentioned in this report and may from time to time add or dispose of any such securities in a manner different than discussed in this report. HSBC and its affiliates sells to and buys from customers the securities of companies discussed in this report on a principal basis. Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed. In the UK this report may only be distributed to persons of a kind described in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. The protections afforded by the UK regulatory regime are available only to those dealing with a representative of HSBC Bank plc in the UK. In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch for the general information of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act (Chapter 289) (“SFA”) and accredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. This publication is not a prospectus as defined in the SFA. It may not be further distributed in whole or in part for any purpose. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch is regulated by the Monetary Authority of Singapore. In Hong Kong, this document has been distributed by The Hongkong and Shanghai Banking Corporation Limited in the conduct of its Hong Kong regulated business for the information of its institutional and professional customers; it is not intended for and should not be distributed to retail customers in Hong Kong. The Hongkong and Shanghai Banking Corporation Limited makes no representations that the products or services mentioned in this document are available to persons in Hong Kong or are necessarily suitable for any particular person or appropriate in accordance with local law. All inquiries by such recipients must be directed to The Hongkong and Shanghai Banking Corporation Limited. © Copyright. HSBC Securities (USA) Inc 2007, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Securities (USA) Inc. MICA (P) 316/06/2007

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Oil & Gas Global Paul Spedding Analyst, Global Energy Sector Head +44 20 7991 6787 [email protected]

Europe David Philips Analyst +44 20 7991 2344 [email protected]

Bulent Yurdagal Analyst +90 212 366 1604 [email protected]

Anisa A Redman Analyst +44 20 7991 6822 [email protected]

Asia-Pacific Henik Fung Analyst +852 2996 6557 [email protected]

Andrew S F Chan Analyst +852 2996 6569 [email protected]

Vishwas Katela Analyst +91 22 2268 1236 [email protected]

North America Credit Andrew Molloy Analyst +1 212 525 2859 [email protected]

Chemicals North America Hassan Ahmed Analyst, Global Sector Head, Chemicals +1 212 525 5359 [email protected]

Sriharsha Pappu Analyst, Chemicals +1 212 525 7959 sriharsha.pappu @us.hsbc.com

Credit Keith Kitagawa Analyst, Chemicals, Metals & Mining, Paper & Forest Products +1 212 525 5160 [email protected]

Saudi Arabia Peter Hutton Analyst, Head of Saudi Arabia Research +966 1 225 7170 [email protected]

Alternative Energy Robert Clover Analyst, Global Sector Head +44 20 7991 6741 [email protected]

James Magness Associate + 44 20 7991 3464 [email protected]

Specialist sales Paul Durham +1 212 525 0221 [email protected]

Kathleen Fraser +44 20 7991 5347 [email protected]

Stephen Doe +44 20 7991 5383 [email protected]

Metals & Mining Paul McTaggart Analyst, Global Sector Head +44 20 7991 6798 [email protected]

Alan Coats Global Steel, Analyst +44 20 7991 6764 [email protected]

Veronika Lyssogorskaya Analyst +44 20 7992 3686 [email protected]

North America Victor Flores Analyst +1212 525 3053 [email protected]

James Steel Analyst, Commodities + 1 212 525 6515 [email protected]

Erica C. Brailey Associate +1 212 525 7669 [email protected]

Jordi Dominguez Analyst +1 212 525 3460 jordi.x.dominguez”us.hsbc.com

Asia-Pacific Daniel Kang Analyst +852 2996 6669 [email protected]

Sarah Mak Analyst +852 2822-4551 [email protected]

Utilities Europe Verity Mitchell Analyst +44 20 7991 6840 [email protected]

Paris Mantzavras Analyst +30 210 696 5210 [email protected]

Credit Rodolphe Ranouil Analyst +44 20 7991 6855 [email protected]

Asia-Pacific Prasad Dahapute Analyst +91 22 2268 1246 [email protected]

Elvis Au-Yeung Associate +852 2996 6555 [email protected]

North America Angie Storozynski Analyst +1 212 525 4133 [email protected]

Credit Shawn Burke Analyst +1 212 525 3132 [email protected]

Global Natural Resources & Energy Research Team

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