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Top Picks Of 2011

Top Picks Of 2011

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Sections

  • 5N Plus, Incorporated
  • Angle Energy Inc
  • Black Diamond Group Limited
  • Bombardier Inc
  • C&C Energia Ltd
  • Canadian Pacific Railway Limited
  • Chartwell Seniors Housing REIT
  • Daylight Energy Ltd
  • EnCana Corporation
  • Jean Coutu Group (PJC) Inc
  • Kirkland Lake Gold Inc
  • NAL Energy Corporation
  • Onex Corporation
  • Pacific Rubiales Energy Corp
  • Pan American Silver Corp
  • Penn West Petroleum Ltd
  • Petrominerales Ltd
  • Quadra FNX Mining Ltd
  • Rogers Communications Inc
  • Semafo Inc
  • Suncor Energy Inc
  • Toronto-Dominion Bank

Institutional Equity Research Industry Update

January 17, 2011 Off The Press

Top Picks Of 2011

In 2010 our top picks, as a portfolio and if held for the full year, performed well ahead of the TSX Composite – up 20.5% on a price basis vs. 12.5% for the Composite. Of our top picks, nine outperformed the index and seven performed worse; all but one of our picks generated a positive return. 2011 has opened with an even better tone than was the case in 2010, as much of the economic malaise seems to be behind us, although there are issues of concern, the long-term risk being deflation and the short-term risks likely more inflationary. Despite the positive market moves over these past 18 months, our Head of Portfolio Strategy believes there is still very good reason to stay long stocks (vs. bonds) over the next 12 months, provided short-term market weakness is not a concern and the Fed is successful with QE2/3. We summarize our fundamental analysts' top picks for 2011 in this report, including a full tear sheet of key fundamentals for each pick and a technical view from Sid Mokhtari, our technical analyst.

All figures in Canadian dollars, unless otherwise stated.

11-106911 © 2011

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. CIBC World Markets Inc. 1 (416) 594-7000
Find CIBC research on Bloomberg, Reuters, firstcall.com and ResearchCentral.cibcwm.com

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.
CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 (416) 594-7000

Top Picks Of 2011 - January 17, 2011

TABLE OF CONTENTS
Director’s Overview................................................................................ 3 Portfolio Strategy: Do You Believe In Magic? ............................................. 6 TOP PICK PROFILES 5N Plus, Incorporated .......................................................................... 30 Angle Energy Inc. ................................................................................ 33 Black Diamond Group Limited................................................................ 36 Bombardier Inc. .................................................................................. 39 C&C Energia Ltd. ................................................................................. 42 Canadian Pacific Railway Limited............................................................ 44 Chartwell Seniors Housing REIT ............................................................. 47 Daylight Energy Ltd. ............................................................................ 50 EnCana Corporation ............................................................................. 53 Jean Coutu Group (PJC) Inc. ................................................................. 56 Kirkland Lake Gold Inc. ........................................................................ 59 NAL Energy Corporation ....................................................................... 62 Onex Corporation ................................................................................ 65 Pacific Rubiales Energy Corp. ................................................................ 68 Pan American Silver Corp. .................................................................... 71 Penn West Petroleum Ltd...................................................................... 74 Petrominerales Ltd............................................................................... 77 Quadra FNX Mining Ltd......................................................................... 80 Rogers Communications Inc. ................................................................. 83 Semafo Inc......................................................................................... 86 Suncor Energy Inc. .............................................................................. 89 Toronto-Dominion Bank........................................................................ 92

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Top Picks Of 2011 - January 17, 2011

Director’s Overview
It has been a rollercoaster of a market ride over the past five years during which I have had the pleasure of managing the equity research team at CIBC. By their very nature, the markets consistently make successful and consistent stock picking a challenge. The notion of top picks at a firm that prides itself on delivering differentiated research is always a very public and measured test of our capabilities, one that our investor clients seem to look forward to each year. The first three years of my tenure as Head of Research, the average total price return for the team’s top picks for each year had been underperforming the benchmark TSX by a meaningful margin; however, this tide has turned in the past two years. In 2010 our top picks as a portfolio (if held for the full year) performed well ahead of the TSX Composite – up 20.5% on a price basis vs. 12.5% for the Composite. Of the 16 top picks, nine outperformed the index and seven performed worse, although all but one of our picks generated a positive return.

Exhibit 1. Five-year History Of Annual Top Picks Returns
CIBC Top Picks' Portfolios (Held For The Full Year) 2006 (Publishing Date – January 5, 2006) 2007 (Publishing Date – January 11, 2007) 2008 (Publishing Date – January 11, 2008) 2009 (Publishing Date – January 16, 2009) 2010 (Publishing Date – January 8, 2010) Average Annual Price Return For Last Five Years
Source: Bloomberg and CIBC World Markets Inc.

Average Full-year Price Return 10.30% (0.90%) (36.80%) 81.60% 20.50% 14.9%

TSX Annual Return 14.51% 7.16% (35.03%) 30.69% 12.52% 6.0%

2011 has opened with an even better tone than was the case in 2010, as much of the economic malaise seems to be behind us, although, as Peter Gibson enumerates elsewhere, there are still lots of issues of concern, the biggest long-term risk being deflation although the short-term risks are likely more inflationary as the Fed wrestles with reviving an economy through quantitative easing. Critical, in Peter’s view, will be the Fed’s success in keeping the bond yield below a ceiling of 3.8%, the level at which equities will become pricey and forecasting messy. With a strong recovery in the wider benchmark indices on both sides of the border in 2009 and 2010, investors may have to settle in for a slightly more reserved market. Despite the positive market moves over these past 18 months, our Head of Portfolio Strategy believes there is still very good reason to stay long stocks (vs. bonds) over the next 12 months, provided short-term market weakness is not a concern and the Fed is successful with QE2/3. In addition, the emerging economy theme for China and India positions Canada’s resource economy to experience ROE recovery that should be quite robust, although the absolute levels are being forecast to remain below those to be delivered south of the border. Peter is forecasting year-end levels for the TSX and S&P 500 of 14,800 and 1,384, respectively, suggesting that Canada’s stock market will outperform its neighbor to the south. For the year just ended, our analysts’ top picks, as a portfolio (if held for the full year), performed well ahead of the TSX – up 20.5% on a price basis (see Exhibit 2) vs. 12.5% for the Composite during the same period (1/11/10 to 12/31/10). Within our returns, nine of the 16 stocks outperformed the TSX Composite Index for the period and seven performed worse, although all but one achieved positive returns for shareholders.

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47 $6. Price On 1/11/2010 $6.17 $15.3% 1.19 $37. While the economics team believes the Fed may act early in the year.0% 14.05 $38.43 $4. 4 . our total return for the portfolio of top picks drops to 14. generating slightly better GDP growth than previously forecast.7% 23.0%. In both cases.57 $55.Top Picks Of 2011 .0% 17.99 13443 Full-year Price Return 12. Taseko Mines Limited Total Energy Services TransCanada Corp.25% 1/26/2010 11/3/2010 4/15/2010 12/1/2010 $35.65 $66. Canadian National Railway Company Eldorado Gold Corporation (US$) Empire Company Limited First Quantum Minerals Ltd. Franco-Nevada Corporation Genworth MI Canada Inc. we provide the date and price of the security on the day the report was released to the market and a calculated price return to that date. which generated a 106% price return for the full holding period. as he downgraded the stock after a 33% gain through April 2010. it will not be aggressive and will likely revert to “stand-by” mode until the end of the year.4% 17. H&R REIT March Networks Corp.January 17.95% 4.35 $38.55 $25.3% 60.8%) 16.71 $21.59 $19.48 $58.2% 4. at just about 2. although this year he didn’t recommend investors hold it for the full period.93 $25. but the recent efficiency push on the back of capital spending should position the U. Pan American Silver Corp. none of the top picks benefitted from a big takeover premium that has been available in past years and something Jeff benefitted from with his pick in 2008. We highlight in Table 2 those four stocks for which we lowered our rating from Sector Outperformer during the course of the year and those two stocks for which we had a change in analyst coverage.5% Reason For Change Rating Downgrade Rating Downgrade Analyst Departure Rating Downgrade Rating Downgrade Analyst Departure Avery Shenfeld and our economics team believe that we are still a way from the stairway to heaven of big job gains that would reduce the unemployment levels materially.9% 6. Average Price Return For Holding Through 12/31/10 TSX Composite Return Source: Bloomberg and CIBC World Markets Inc. Top Pick Performance For 2010 Return To Change Of Rating Or Dropped Price On Date Of Change Coverage Date Top Picks For 2010 5N Plus. still 150 basis points (bps) better than the Composite Index price return. was Jeff Fetterly’s pick of Total Energy Services (TOT–TSX.38 $15.21 $21. This positioning should help to create an investment environment that continues to have more stability.94 $9. 2011 The highest Sector Outperformer return achieved by our analyst team.S. Much of it is expected to be the same as 2010.78% 4.20%) 10.26 $27. Incorporated BPO Properties Ltd.5% 12.92% Price On 12/31/10 $7.17 $3. Suncor Energy Inc.0% 8.35 $18.05 $47.4% (0. If we use these returns (and pretend the investor simply put the cash raised from the sale under their pillow).28 $5.3% 106.16 $36.00 $33.58 $4. economy for better job recovery in the back half of the year.10 $41.69 4.70 $94.03 $4.25 $18. Not Yet Heaven in Twenty Eleven.82 $16.89 $35. Despite a more active M&A environment.1% 20.20 $14.0% 8.15 11947 Drop Coverage Or Changed Rating 4/9/2010 7/21/2010 $61.S.88 (9. Avery Shenfeld outlines what he thinks is in store for the coming year. but with the U. (US$) Shaw Communications Inc.82 $108.51% 32.00 $21. held for the full year. In his most recent economics piece.2% 13. SP rated). Exhibit 2.9% 20.75 $30.6% – led by a slightly more confident consumer. This is a three-peat for Jeff in delivering the top-returning stock (full-year return).

2011 The backdrop in Canada remains better than we foresee globally.A KGI NAE OCX PRE PAAS PWT PMG QUX RCI.00 Source: CIBC World Markets Inc.UN DAY ECA PJC.00 $25. Black Diamond Group Limited Bombardier Inc.00 $42.00 $7.50 $44.00 $15.Top Picks Of 2011 . We summarize the fundamental analysts’ top picks for 2011 throughout the rest of the report along with the technical view for each of these top picks from Sid Mokhtari. NAL Energy Corporation Onex Corporation Pacific Rubiales Energy Corp.00 $40. and unemployment rate suggest.00 $16. EnCana Corporation Jean Coutu Group (PJC) Inc. We anticipate that this article will be followed up in the coming month with some additional color on where our quantitative models are predicting differentiated performance in the market. to provide us with a macro view on where he expects the markets to go in 2011.. Quentin Broad Managing Director. our technical analyst. Once again for 2011 there is a full tear sheet of key fundamentals for each of our top picks (these are found on an ongoing basis on the second page of our fundamental research reports) and a technical view.00 $11. Top Picks Of 2011 Ticker VNP NGL BDI BBD.To 18.75 $78. We asked Peter Gibson. Head of Portfolio Strategy. Incorporated Angle Energy Inc. C&C Energia Ltd. Head of Equity Research 5 .50 $47. we wish all of our clients a healthy and prosperous new year.75 $13. Petrominerales Ltd.25 $24. the economic indicators like GDP growth.B SMF SU TD Company 5N Plus. Canadian Pacific Railway Limited Chartwell Seniors Housing REIT Daylight Energy Ltd. Suncor Energy Inc.S.50 US$36. Strong prospects for our resource industries and improving manufacturing and business investment should start to shoulder more of the economic growth as it is offloaded by the consumer in Canada.00 $18. Pan American Silver Corp.00 $9.00 $32.50 $22.month Price Target $8. Rogers Communications Inc. consumption growth. Kirkland Lake Gold Inc. Toronto-Dominion Bank Rating Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer 12. in composite. When we compare the outlooks for the economies of Canada and the U. although there is some concern over the strength of the consumer and their ability to contribute to the economic expansion with the same vigor as they delivered in 2010. Quadra FNX Mining Ltd.B CZE CP CSH. Semafo Inc. that Canada should fare better than our neighbors south of the border. Exhibit 3.50 $84.25 $43. Penn West Petroleum Ltd.50 US$52.50 $9. On behalf of CIBC.January 17.

) C$/US$ Source: Bloomberg and CIBC World Markets Inc.95 3.8%. Toronto (416) 594-7194 Jeff Evans.44 1.580 0. CFA.97-1.S. S&P 500 T-Bills Bond Yields WTI Oil (US$/Bbl) Gold (US$/oz. begin to see self-sustaining economic growth in 2011 that resembles the early stages of recovery witnessed in 2004? 6 . Exhibit 4. Toronto (416) 956-3250 We believe that by the end of 2011 the TSX will have recorded gains of approximately 11. Most strategists would say the same for 2011. The benefits which Canada enjoys as an exporter of commodities while benefiting from sustainably low U.3 3.369 1. in particular. real estate market have resulted in a U.33 88 1.16 3.03 13. albeit at much faster rates. North American equity markets.800 1.5% with a dividend yield of over 2% for a total return of approximately 14% for the year. At the same time.271 0. the outlook for the global economy and. Relatively high structural unemployment in the U. 2011 Do You Believe In Magic? Peter Gibson. rates is obvious – The question is simply one of how long can the U.S. recovery that is approximately one-third to one-half the rate of growth we would like to see.272 0.S. We expect that the S&P 500 will record a total return gain of over 10% comprised of price appreciation on the order of 9%. Unfortunately. Exhibit 4 is a summary of our forecasts for 2011.S.00 Themes By traditional measures. quantitatively ease and can the U. the longer that the U. economy is weak but should gain some momentum in 2011. 2011E 14.S.Top Picks Of 2011 . Federal Reserve continues to rely on quantitative easing. the U. to help underpin their recovery while trying to stabilize the debt crisis in Europe. Coordinated global growth is clearly a leading cause of persistently higher average oil prices. is on the path to recovery then the longer that BRIC nations will grow.S.S. Understanding the link between quantitative easing and preventing bond yields from reaching our estimated 3. China and Japan have a vested interest in working with the U. So far it appears to be working.8% ceiling is the key to appreciating how long gold and oil prices and the TSX can likely rise. therefore.S.S. combined with a dividend yield of approximately 1.28 3.S. and continued weakness in the U.S.January 17. Every year of economic growth is another year of growing global oil consumption. Federal Reserve's successful administration of quantitative easing through 2011.46 93-103 1.S. 2011 Forecasts Summary Recent Canada TSX T-Bills Bond Yields U. relies on the U.384 0. Presumably. The TSX should continue to outperform the S&P 500 as a result of continued growth in the emerging nations as the U.34 1.

it is unlikely that we will witness secular profit growth driven by inflation in the way it was witnessed in the 1970s. however. but it is an inherently risky strategy. weak rate.S.S. 2011 To do this. we still believe that. government would still choose to push the U.S. below the 3. We believe that the safe haven.S. 7 . gives it the room to continue relying on the use of quantitative easing. As long as quantitative easing holds the bond yield below 3.S.S. yield curve tilts. specifically. if possible. the U. recovery is taking hold.700/oz. This fact underpins investors’ reliance on the Fed’s ability to continue administering quantitative easing. We cannot over-emphasize the significance we attach to the Fed’s goal of holding 10-year U. economy can continue to recover at the current. we would expect continued but slower appreciation in gold prices owing to emerging economy growth. These risks include a number of geopolitical hotspots. Treasury bond yields below the 3.8% level. If bond yields. the Fed tilted the yield curve.S. dollar should strengthen.S.8% In the absence of wage inflation.5% level for as long as possible so that the U. Fed strategy of quantitative easing is intended to hold U. The Fed Is Trying To Hold The 10-year U.S. which is indicated by our asset mix models.S. the implication would be that quantitative easing is losing its effectiveness. Emerging economy growth is underpinning commodity inflation while the West is not demonstrating any evidence of wage inflation. The Fed then could still. Weak corporate profit growth makes North American stock markets very sensitive to the level of interest rates. that of food and energy inflation at a time when North America is not recording any wage inflation. Historically. in which case US$1. Treasury Yield Below 3. In 2004. then the U. the U.S. when the U. status of the U. believe that the U. raise short-term interest rates slightly in the hope that bond yields would then fall. dollar devaluation below the recent lows.8%. should rise above the 3. reserve currency. The recently recorded record-low volatility is very unusual. the short-term cyclical risk is the growing fear of inflation.5% level. gold is likely. therefore. preferably. bond yields below the critical 3.January 17. If the U.S. It is more a matter of understanding the Fed’s ability to continue administering quantitative easing because the day that it becomes necessary to withdraw substantial liquidity is the day investors risk forecasting chaos. relatively. We.S.580/oz. reluctantly. therefore.Top Picks Of 2011 . Yet.8% level and.S. ultimately. housing market must stabilize. Global investors are placing their full faith and confidence in the Fed’s successful administration of quantitative easing as there remains a long list of ongoing risks. stock market has now rallied 85% from its 2009 lows and that the recent rally has been so significant that markets are well above mean reversion levels. during the early stages of that five-year recovery. it is very favorable for equity markets as long as corporate profitability is stable or rising. gold price target. the ongoing risks in Europe. the fact that the U. due to the fact that low volatility often implies a sense of complacency. Historically. the biggest risk that the North American economy faces. hence the US$1. Risks For The Fed The range of possible outcomes for North American stocks and bonds is perhaps greater than it has been in years. then more can be done which still pushes the U. We refer to this as a tilting yield curve and it could still be a last resort strategy for the Fed in an attempt to prevent bond yields from rising too much. markets have recorded very low volatility immediately before crisis. it is impossible to pass price increases through to consumers and. Biggest Risk Is Deflation Although deflation is. Nonetheless. dollar devaluation further. often in part.

S. This is the dilemma the Fed faces and it is the direct result of too much government and consumer debt.8% ceiling too quickly while the U. In fact.. Should the Fed be forced to tighten because the bond yields reaches the 3. the 3. mortgage rates would be catastrophic for home prices and consumer confidence in the absence of wage inflation and inflationary profit growth stock markets would be crippled when bond yields rise too much. and act as a growth tax rather than a cause of secular inflation at first.3%). if bond yields rise too much then the risk of a panic in debt markets also exists. given the sheer potential size of emerging economies. would probably be perceived as a greater risk for Europe.8% 10-year U. economic growth gains momentum and that growth becomes self-sustaining. it is a race against time to see which nation is more energy efficient.S. yet. develop energy substitutes faster and withstand sustainably higher oil prices longer than others. From time to time. can adapt faster.S.S.3% when. the greater the likelihood that U. i.e. the 10-year Treasury would naturally be at 4.S. perhaps.S. economy is still relatively weak. We would think that sustainably high oil prices actually contribute to weaker U. On the one hand. high oil prices should underscore the safe haven status of the U. 8 . real estate prices. desperately needs a faster rate of economic recovery and. 3%–3.. however. Treasury bond yield level represents the level of yields that causes the S&P 500 to appear significantly overvalued.January 17.Top Picks Of 2011 . Higher Oil Prices And Stable Bond Yields In a sense. The risk is that inflation gains momentum and when the Fed no longer has the resources to fight the upward tendency in yields. we would also anticipate significant new pressure for U. The longer that the Fed can do this. the U. The irony being that this level of bond yields increases the likelihood of more quantitative easing. then the risk of another U. A sudden significant upward move in bond yields and. At these levels and above. Eventually.e. recession still exists. 2011 The Circular Irony Of Quantitative Easing.S. Treasury market.S. Implications At present. Exhibit 5 illustrates that the implied ceiling for bond yields has been falling steadily for many years. the goal would be to hold bond yields at 3.S.1%.S. it is like trying to stop the water flowing from a garden hose by holding your thumb over the end. growth relative to their historical experience and contribute to holding bond yield in the desired rate (i. they skyrocket. therefore. our view is a little different. resulting in capital flow back into the U. although even moderate tightening by the U.

1 5.S. the first critical step demands that we check Exhibits 5 to 8.8% ceiling and U. 9 . 10-yr U. based on the fact that the bid-to-cover ratio. The first collapse occurred from 2000 until October 2002. The Fed had restored a steep positive slope to the yield curve. there have been two massive collapses in the U. Second. To assess the ongoing potential for the U. We believe that.5% Excess debt floor 1997 ceiling 2000 ceiling 2003 ceiling (5.S. Third. By contrast.5% and it is likely that quantitative easing has played a significant role in preventing yields from rising further. the Fed can continue to quantitatively ease and hold the 10-year U. yield curve became inverted (see Exhibit 7). albeit manipulated by the Fed. Treasury bond yield.8% 4 3 3. yield curve maintains a steep positive slope. the recovery in 2009 coincided with bond yields at the low end of our estimated range and forward ROE was recovering.S.S.S.S. 10-year U. for now.8% ceiling 4.S. On both of these occasions. This is crucial since Exhibit 6 for S&P 500 ROE indicates that trailing and forward ROE are growing at approximately one-third to one-half the desired rate.January 17. trailing ROE was on the verge of recovery and the bid-to-cover ratio began to rise due to the safe haven status of the U. the 10-year U. Treasury yield exceeded the then current bond yield ceiling. equity market. the bid-to-cover ratio for U. this decline probably resulted from the fact that the Fed had tightened until the U. 2011 Exhibit 5. Treasuries was also at relatively low levels (see Exhibit 8).8% ceiling. however.S. Since the year 2000. Both major market collapses were signaled by three critical observations.2% ceiling 5 Bond Yield (%) 8 7 6 +57% -50% +94% -57% +85% 9 3. this would imply.0% Desired long term average 2 2.S. bond yield How Long Can The Fed Keep The Investing Window Open? Our View On Bond Yields Below The Ceiling As long as the 10-year bond yield remains below the 3. Treasury market demonstrated during the global banking crisis. Treasury Floors And Ceilings 1800 1995 ceiling 1600 1400 1200 S&P 500 Index 1000 800 600 400 200 0 1998 1999 2000 2001 2002 2003 2012 1994 1995 1996 1997 2004 2005 2006 2007 2008 2009 2010 2011 Term Structure 0% 0 4% 1997 floor 3.Top Picks Of 2011 .S. The 10-year U. stock market.S. The second collapse occurred during the housing crisis of 2007 and the banking crisis of 2008.S. then we remain optimistic about the outlook for North American equities.0% Ultimate floor 1 S&P 500 Source: Bloomberg and CIBC World Markets Inc. Treasury bond yield below the critical 3. S&P 500 profitability had started to decline. First. is at very high levels and the U.9%) 2002 ceiling 4. has recently been as high as 3. corporate profitability is rising.

5 2 1.5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: CIBC World Markets Inc.January 17. Bid-to-Cover Ratio 5 4. Yield Curve 2 1 0 -1 % -2 -3 -4 -5 Jan-96 Jan-01 Jan-06 Jan-09 Jan-98 Jan-94 Jan-97 Jan-02 Jan-05 Jan-10 Jan-95 Jan-99 Jan-00 Jan-03 Jan-04 Jan-07 Jan-08 Yield Curve Source: Bloomberg and CIBC World Markets Inc.5 1 0. S&P 500 Index And ROE (Forward And Trailing) 1800 1600 1400 S&P 500 Index 1200 1000 800 600 400 200 0 Jan-94 Jan-98 Jan-03 Jan-07 Jan-11 2012 Jan-11 25 20 15 10 5 0 Jan-96 Jan-97 Jan-00 Jan-01 Jan-02 Jan-04 Jan-05 Jan-06 Jan-09 Jan-10 Jan-95 Jan-99 Jan-08 S&P 500 ROE Trailing ROE Forward Source: Bloomberg and CIBC World Markets Inc.5 4 3. 2011 Exhibit 6. Exhibit 8. Exhibit 7.5 3 2. 10 ROE (%) .Top Picks Of 2011 .

Exhibit 9. Cash And Real Estate) U.S. we are trying to emerge from a recession. The U. in fact.S. gold prices and the Canadian dollar. residential and commercial real estate prices remain weak.S. Virtually every forecast.Top Picks Of 2011 . At the same time that bond yields are a mere 50 bps from the ceiling. but.S. recession. thereby holding 10-year U. then we would expect forecasting chaos. economic recovery. The 2007/2008 crisis. in reality. Commercial Source: Bloomberg and CIBC World Markets Inc. emerging economy growth. we view it as very dangerous to be naively making forecasts for gold and oil prices and the Canadian dollar based on emerging economy growth without realizing that. Could This Be 2004 Because We Are Recovering From Recession? Exhibit 9 further underscores the fine line that the Federal Reserve is walking. U. The equity market recovery was supported by corporate profit growth and the equity market rally persisted until 2007 when bond yields again reached the then current ceiling. Usually after the late-cycle crises. as in 2004.8% level. 2011 Self-sustaining U. Treasury bond yields below the critical 3. quantitative easing is underpinned by a significant rally in the S&P 500. therefore. resulted in a very significant U. 3 and the bond yield ceiling. impacts our outlook for the U. Cash S&P 500 U. oil prices. is directly impacted by the Fed’s ability to quantitatively ease and hold bond yields below the critical level.S.S. Residential U. however.S. typically. dollar and.S. in turn.January 17.S. Economy (Equities. The U. 11 . It is very common to experience crises late in an economic cycle such as 1987/1988 and 1997/1998 and then again recently in 2007/2008. the market rebounds for about two years before higher rates lead to another recession. at the present time.S. result in technical recessions. equity market began to recover in October 2002 from the recession witnessed during that period. Economic Recovery Still Depends On Quantitative Easing In fact. Quantitative easing. Given these facts. whereas other late-cycle crises do not. If the Fed fails. they all turn on QE 2. Fortunately. we are optimistic about the Fed’s chances of success in eventually establishing a self-sustaining U.S. but we know full well that this view depends entirely on quantitative easing.

Head-and-shoulder patterns are among a few of the patterns that seem to have a demonstrable history of success.January 17. 12 . became the basis for a sustainable stock market advance. After a sharp run-up in 2003. One of the key takeaways from that period is that bond yields came very close to our calculated ceilings and. ultimately. yet. there were other ancillary indications pointing to a continued recovery in equity prices. the S&P 500 total return graph demonstrates how persistent and significant that equity rally proved to be from 2002 to 2007. It was interesting to note that there was an inverted head and shoulders pattern that occurs in 2002 and again in 2004. then the U. 2009 and during 2010.S. It would be a minor indication of growing confidence and a sustainable expansion. 2011 Exhibit 10. stock market may pause for part of 2011 while keeping a longer-term upward trend intact. Resembles 2004? A Minor Positive Supporting A Growing Investor Confidence In Exhibit 10.Top Picks Of 2011 . We witness this pattern again during 2008. but finishes the year modestly higher after the big year-end run-up in 2010. some very modest Fed tightening prevented the bond yield from rising above critical levels. Although corporate profit growth was stronger then compared with today. the S&P 500 moved sideways to slightly down for the first part of 2004 and bond yields fell modestly. if necessary. very modest tightening to keep bond yields within a critical range. If the Fed can use quantitative easing or. What Pattern Is The Fed Hoping For? We would think that the Fed is hopeful that the current period resembles 2004. The simplistic implication here would be that the S&P 500 goes sideways for several months. We probably face a similar outcome today. S&P 500 Total Return (2000 To Present) Source: Bloomberg and CIBC World Markets Inc. Corporate profitability continued to grow during that time and.

By comparison. stock market needs to pause. 2011 In Canada. the S&P 500 five-year rate of return is still less than that of T-bills and far less than that of U. stocks. Canada’s superior performance resulted from a number of important factors. Exhibits 11 and 12 illustrate the returns from Canadian and U. 10-yr Canadian Gov't. the cumulative rate of return for the TSX over the last five years again exceeds the rate of return for Canadian bonds and T-bills.S. Bonds And T-bills CDN Bonds CDN Cash TSX Source: Bloomberg and CIBC World Markets Inc. despite all the turmoil of the last few years. Stocks Still Outperform Bonds And T-bills The very significant U. These exhibits also show that.S. Cash S&P 600 S&P 500 Source: Bloomberg and CIBC World Markets Inc.S. 10-yr Bonds And T-bills CDN Bonds U. 13 .S. bonds.January 17. bonds and T-bills and shows very significant short-term losses in bonds since the summer of 2010 while stock prices soared. Five-year Historical Returns: S&P 500/600. In fact.S. including a stronger banking system and sustainably higher oil and gold prices because of emerging economic growth. stock market rally at the end of 2010 and the ongoing problems in Europe would suggest that the U.S. Five-year Historical Returns: TSX. Exhibit 12. Not The Case In The U. Exhibit 11.Top Picks Of 2011 .

8% ceiling. Since the lows of 2009. the level of U. has completely overtaken the S&P 500 and the TSX.3% then the Fed is able to continue quantitatively easing.S. Exhibit 13.8% Ceiling In The U. If bond yields are held in the range of 3% to 3. Five-year Historical Returns: TSX And S&P 500 TSX S&P 500 CIBC Small Cap Source: Bloomberg and CIBC World Markets Inc.S. to continue quantitative easing is a major driver of potential returns for the TSX. rally in the shares of commodity sectors. therefore.S. dollar and gold and oil prices. Exhibit 14 illustrates the inverse relationship between the U. Our preference for the TSX relative to the S&P 500 depends entirely on the Fed’s ability to keep bond yields below the 3. Preference For TSX Over S&P 500 But Only If Bond Yield Stays Below The 3. To the extent that this contributes to a further devaluation of the U. dollar then this implies generally higher gold and oil prices. 2011 TSX Versus S&P 500 Exhibit 13 further illustrates the significant performance of the TSX relative to the S&P 500 but also demonstrates the very dramatic outperformance posted by our CIBC Small-cap Index. and Exhibit 15 illustrates the very high correlation between TSX total returns and the commodity Index.S.Top Picks Of 2011 .S. related.January 17. yet. 14 . the TSX has also demonstrated both a small-cap effect and a significant. bond yields and the ability of the U. The CIBC small-cap universe started from lower levels in 2008 and. Not surprisingly. Since approximately 50% of the TSX is comprised of the energy and materials sectors.

it is a strategy that contributes to lower interest rates for export-dependent countries and.S.Top Picks Of 2011 . dollar in the process. 2011 Exhibit 14. dollar as a result of monetizing debt and debasing the U. 15 .S. is intended to hold bond yields below the critical ceiling levels of 3. therefore. for the world. for example.January 17. Cumulative Returns: US$ Trade Weighted.8% but it also contributes to the devaluation of the U. but.S. to become an export-dependent country as a result of devaluing the dollar. in general. Quantitative easing. Other Important Circular Implications Of Quantitative Easing Quantitative easing.S. Gold (rebased) Trade-weighted USD (RHS) Exhibit 15. The goal is not so much for the U. Oil And Gold 10 9 8 7 6 5 4 3 2 1 0 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 TSX CRB 120 115 110 105 100 95 90 85 80 75 70 Oil (rebased) Source: Bloomberg and CIBC World Markets Inc. has a number of other important implications. is likely to pursue this strategy for as long as it possibly can. The U. High Correlation Between TSX And CRB Returns Source: Bloomberg and CIBC World Markets Inc. This is likely to remain the case until countries like China face a serious threat from inflation. rather.

higher oil prices create relatively more pressure for less energy efficient. can get away with more quantitative easing.S. emerging economies but it also represents a growth tax on the U. therefore. This has important long-term potentially crisis implications for China. In effect. is the largest consumer of oil globally. 2011 Economic theory suggests that China cannot maintain an independent monetary policy relative to the United States if it fixes its currency and tries to control capital flows at the same time. easy. is walking a fine line between using quantitative easing in an attempt to re-establish self-sustaining economic growth while risking much higher oil prices that could derail both the U. and global recovery. Sustainably high oil prices. It comes full circle then.S.S. U. The sheer potential size of the Chinese and Indian economies. Higher Oil Prices Curiously. more of a safe haven and simultaneously increasing the likelihood that the U.Top Picks Of 2011 . as long as it tries to maintain its currency peg to the U.. and in the U. the U. are a cause and effect of quantitative easing. Higher oil prices can increase the risk of chaos elsewhere. ironically. allow the U. dollar devaluation also contributes to higher oil prices.S. Therefore. Dollar Devaluation In the short term. for investing opportunities in Canada.S. economy.S.S.S. which is relatively more punitive for other nations than the U. case can help hold bond yields down. the opportunity is for continued investment in these sectors. it is also relatively more efficient in its use of oil in generating GDP growth. as well as how significant.S. Sustainably high oil prices are crucial today if the U. obviously.S. a sustainably higher oil price places relatively more pressure on other economies and may. thereby making the U.S. U. quantitative easing tends to contribute to rapid growth in emerging economies and. therefore. Although the U. even inflationary growth in time.S. dollar. In a sense. high oil prices are a growth tax. which contributes to holding bond yields down at the same time. easy. therefore. to extend its quantitative easing strategy. we believe that the Fed's ability to hold bond yields below the critical ceiling is the single most important determinant of how high gold and oil prices can rise and for how long.S. Yet. Sustainably high oil prices also create economic incentive for the U. perhaps.S. The U. monetary policy for China. monetary policy results in aggressive. has enormous implications for the average level of oil prices longer term and. In turn. force its conversion to natural gas just as the British economy once converted from coal to oil dependence. 16 . these sectors are supercritical to the outlook for the TSX.S. to pursue energy substitutes and. therefore.January 17. This would imply that aggressive. ultimately. is to have the economic incentive to lessen its reliance on oil before the emerging economies become so large that oil prices are crippling. perhaps.

we believe that the Fed will attempt to devalue the U. 17 . Dollar.January 17. Exhibit 16 illustrates the relative performance of these three sectors since the beginning of 2000. Higher Gold Prices The energy.S. dollar for as long as possible and that this is the main driver for higher gold prices as gold is often a currency proxy. however. Devalue The U. dollar devaluation strategy is ongoing and a main driver of higher gold prices. these two sectors have been the leading drivers that have allowed the TSX to dramatically outperform the S&P 500. material and financial sectors alone represent almost 80% of the TSX market capitalization.S.Top Picks Of 2011 . The TSX energy sector has moved sharply higher as West Texas Intermediate oil prices have reached the mid-90s. TSX Sector Returns: Financials. the materials sector has recorded gains as a result of higher gold prices from 2001 to the present. Materials And Energy TSX Energy TSX Materials TSX Financials Source: Bloomberg and CIBC World Markets Inc. Although the timing of the gains from the energy and materials sectors differs a little. we have argued that the U. 2011 Exhibit 16.S. Since 2001. This represents the level we expected to see for year-end 2010 and we should witness improving profitability for the energy sector as a consequence in 2011. We expect oil prices to trade in a range of US$93/Bbl–US$103/Bbl throughout 2011. Up to this point. In general.

As indicated by the sector relative weights in the first column. Key Is Stable S&P 500 ROE The North American equity market gains and concurrent U. however.19 standard deviations. For example. improving earnings for the energy sector (26%) and much stronger earnings for the materials sector.Top Picks Of 2011 . it should be noted that the energy. It is likely that forward Street forecasts will rise slightly so that S&P 500 ROE is likely to remain flat at the currency very high levels (over 20%). bond market losses since the summer of 2010 are both unusually large. the table summarizes the median values for each of the sectors. The energy sector return on equity is also largely unchanged on the trailing basis. while forward earnings forecasts are falling. median 8%). we prefer to see return on equity growth rates of 0. In effect. Street forward ROE growth rates are still showing minimal growth.22 standard deviations.11 standard deviations. generally. Therefore. the weighted average return on equity for the sector is unchanged. 2011 TSX Earnings Forecasts. At this point in the cycle and given pervasive concerns about the U. This underpins our outlook for $830 aggregate TSX earnings. although the big five banks in Canada are. however. are the gains that were recorded by the small-cap TSX materials sector. Median Values: Key Data Points For The TSX Exhibit 17 summarizes some of the key data points relating to the S&P/TSX Index. it would be expected that forward return on equity would rise. The median value for financial sector profit growth is 0. recording ROE declines on a trailing basis. median TSX profit growth is a mere 0. This equally weighted small-cap index has soared in just two years. economy.3 standard deviations or better. 18 . In order. Given the recent significant run-up in oil prices. We would expect that to change as oil prices remain close to US$100/Bbl US for West Texas Intermediate. we anticipate stable to weaker ROE and earnings for 30% of the TSX. it comes as little surprise that trailing earnings are now rising very slowly in the S&P 500. TSX ROE. We noted earlier that for both the S&P 500 and the TSX the rate of profit growth on both the forward and on a trailing basis remains unusually weak.45% of TSX market capitalization.S. This is also significant to the overall return on equity characteristics of the TSX since the financial sector represents approximately 29% of the index weight. however. Even more dramatic.S. Trailing Now Leading Forward Earnings In general. In fact. is likely to record better growth but from lower levels (recently 12%. materials and financial sectors account for 78. to minimize the impact of outliers.January 17. The strongest profit growth is being recorded by the materials sector at 0.

22 Trailing P/E (x) 17.08 21.80 18. and Canadian information technology sectors.74 13. the two sectors with the most substantial amounts of cash on the balance sheets would be the materials sector and the information technology sector. Treasury bond yield remains below the ceiling.09 -0.89 18.22 0.72 16. Now Just Make Sure ROE Is Rising Although the financial sector is not demonstrating significant profit growth at present. Key Data Points For The TSX Median Sector Relative Weight (%) 100.53 Forward P/E (x) 14.98 15.76 10.84 Forward Roe Growth (stddev) 0. it is recording a median dividend yield of 4.11 -0.89 Forward Earnings And Traditional Valuation Aggregate earnings for the TSX should be capable of reaching $830 judging by the anticipated return on equity growth for the energy.79 1.00 Dividend Yield (%) 1. 2011 Exhibit 17. more than 50% of their revenues come from international operations and emerging economies.00 1.86 11. Attractive Financial Sector Yield.03 13.54 0.. as long as the 10-year U.03 10.17 0.54 3.05 -0.47 14.80 9.52 5.80 21.20 2.40 22.56 41.76 3.03 20. the median forward P/E ratios for the materials sector and the financial sector would be close to 13x one-year forward earnings.S.92 11.07 0.56 -0. Sustainably high dividend-yielding stocks will continue to be a crucial long-term investing strategy for those that choose not to be active tactical asset allocators. although this sector is 2.15 CIBC Analyst Implied Return (%) 15.70 0.800 for year-end 2011 appears likely. in both the U.32 -0.49 0.72 Forward Roe (%) 11.21 8.76 12.93 0.94 0.19 0.08 25.84 12.39 13. our TSX target of 14.99 11.69 16.00 26.34 10.09 11.29 12.55 15.21 0.57 4. and Canada but especially in the U.72% and the Street median return is expected to be 11.94 29.89 11.11 25.58 21. It is also worth noting that the CIBC analyst median return is expected to be 15.42 15.04 18. If the Street forward earnings forecast is correct.02%.61 10. Very Large Cash Holdings On The Balance Sheet.99 14.S. Our global portfolio system indicates that the weighted average dividend yield for the financial sector is an impressive 3. information technology sector companies are frequently what we also call value-added exporters. In Canada. 19 .16 Street Implied Total Return (%) 11.44 4.18 5.15 5.53 -0.38 24.38 2.03 0.22 13.56 2.January 17.Top Picks Of 2011 .44 11.55 5.11 16.47 13.59 13.41 9. That is.57 1. case. Nonetheless.34 -0.97 10.83 13. This is especially true for the U. In the U.93 9. In fact.06 13. this would imply a current P/E on forward earnings of less than 15x for the TSX overall.30 10. ROE (%) 8.31 6.95 13.S. Both trailing and forward growth is being recorded by the information technology sector. Especially In The U.S.08 -0. Finally.85 7.61 13.82 7.22 18.79 12.59 12.42 All Sectors Energy Materials Industrial Consumer Discretionary Consumer Staples Healthcare Financials Info Tech Telecom Utilities Source: CIBC World Markets Inc.08 0.55 12.36 -0.23 13.29 12.76 Trailing Roe Growth (stddev) 0.S.5% of the TSX market capitalization.00 5.84%.71 12.46 9.05 -0.02 7.10 23.S. We believe that TSX earnings will be a little weaker than the Street expects and that there will be slight compression of the earnings multiple during the course of the year. materials and financial sectors.42 1.64 16.67 5.80 19. companies have accumulated significant amounts of cash on their balance sheets as a percent of common equity.36 Cash As % Of Equity 13.03 0.12 3.21 0.07 17.21%.

Both of these sectors in the U. then it is possible that these substantial cash holdings are. Exhibit 18. S&P 500 Consumer Discretionary Financials Info Tech Source: Bloomberg and CIBC World Markets Inc.S. however. for dealing with future emerging economy banking crises. increased dividend payouts. Their links to emerging economy revenues are fuelling significant profit growth in many cases.S. economy to recover and for consumer confidence to improve.S.S.January 17. consumer and business confidence eventually returns. It is simply a matter of the U.S. S&P 500 companies that are benefiting from their exposure to emerging economy growth.S. 20 . consumer discretionary sector has also benefited from exposure to value-added exporters. despite all the justified concern about the state of the U. Furthermore. The Last Two Major Bubbles In The U. Our counterparts in the TSX are the energy and materials sectors. 2011 At present. economy appearing stable for long enough that U. financial sector has better positioned the U. There is a large list of blue-chip. specifically the collapse in U.S. ultimately. they remain far below the levels recorded during their respective speculative manias.S. We often wonder if the massive reorganization of the U. Financials Recovering And Galvanized Exhibit 18 summarizes nicely the impact on share prices of the last two major bubbles. however. the Fed can keep bond yields below the ceiling. large-capitalization. If. This should remain a dominant theme for many years. used for mergers and acquisitions. consumer. are recording profit growth at present and although both areas have risen steadily since market lows of 2009.S. To some extent. info tech prices from 2000 to 2003 and the collapse in financial sector share prices from 2007 until 2009. we believe that these high cash holdings reflect concern about the state of the North American economy and that these high cash holdings amount to a war chest. the U. share buybacks and capital investment.S.Top Picks Of 2011 . allowing more time for the U. the consumer discretionary sector has been one of the leading performers through 2010. Info Tech Not A New Mania Yet.

that we may be required to change our asset allocation in the next couple of months. Our Recommended Asset Allocation The following is a partial summary of our recommended asset mix given our 2011 targets and limited space in this publication. however.January 17. Exhibit 20 illustrates the standard format for our basic scenario analysis for asset allocation. The gold and oil price targets for 2012 and the related level for the TSX depend almost entirely on the arguments that we’ve already made with respect to the level of U. bond yields and the need for continued profit growth. i. 2011. should mark time. namely the bond yield ceiling. North American equity markets are overdue for a correction now or. however. 21 . far more significant. we are focused on our 2011 forecasts. 2011 Exhibit 19. ROE growth and quantitative easing. For the purpose of this article. Our long-term. It is true. Our recommended asset mix is shown for our various investor profiles in the top right-hand corner of Exhibit 20.S. We have indicated target levels for 2012 but these targets are highly dependent on a number of things as we go through 2011. our recommended asset allocation and the implied total portfolio returns. at least. We will look seriously at 2012 targets later in 2011 but for now our concern is with getting this year’s levels correct. Gold And Materials Sector Performance Small Cap Materials Gold TSX Materials S&P 500 Materials Source: Bloomberg and CIBC World Markets Inc.. We have benefited significantly by being overweight equities since January 2009 and by staying the course in our Investment Strategy Committee publication from November 2010. depends on all the issues this publication addresses.Top Picks Of 2011 .e. outlook.

This is especially true if the 10-year U. Treasury bond yield level gets any closer to the 3. bonds and T-bills. In order to provide some indication of our current view with respect to North American stocks. 22 .S. Within this allowable range we have remained at 40% Canadian equities. 2011 Exhibit 20. Basic SAS Source: CIBC World Markets Inc. as indicated in Exhibit 21. we recommended a 45% Canadian equity exposure. 20% U. This would permit us to alter our stock and bond allocation within a range of 20% to 70% and alter the T-bill exposure from 0% to 50%. A Discussion Of Only One Of Our Common Investor Profiles: The Growth Profile The most traditional investor profile we have referred to over the years is probably best represented by a growth profile and an allowable asset mix range as indicated by point C – tactical asset allocation (refer to Exhibit 20). equity exposure and a 35% Canadian bond exposure.Top Picks Of 2011 .S. This is shown just under the blue “optimistic” button allocation asset mix ranges. a 20% U. When we first introduced the growth investor profile at CIBC.8% ceiling. It is extremely likely that we will change our recommended asset allocation over the course of the next two to three months. We have not yet changed our recommended asset allocation for the various investor profiles outlined in the top right-hand corner of Exhibit 20. equities and 35% Canadian bonds. we have decided to focus on only one of the several investor profiles. If our year-end 2011 targets prove to be correct then.January 17.S.

35%. –57% and +85% since 1998.26% total return with a 10. Optimization Our scenario analysis system for asset allocation also allows us to compare what our original recommended asset allocation would be with recommended weights that result from mathematically optimizing exposure across all possible asset classes. once a year or once every two years) is extremely dangerous in the current environment. yet. The bar graph under the performance attribution section of Exhibit 21 indicates that we expect the majority of returns to result from being invested in Canadian equities in 2011. –50%. the S&P 500 recorded rallies and collapses of +57%. Performance Attribution Exhibit 21 shows the 65% total allocation to U. with the remainder of 35% invested in Canadian bonds. long-term average equity returns were expected to collapse and did collapse starting in 1998 (3. It should be noted that we also choose to alter our asset mix exposure anytime we observe significant changes in U.e. Understanding and adjusting to these market moves is crucial to investor success.67% p..S.January 17. Our asset mix models play a very important role in determining the timing of our exposure to a variety of asset classes. The Canadian equity component is expected to contribute 5.a. Our floor and ceiling calculations in Exhibit 5 result from our asset mix modes.26% but it also contributes a disproportionately larger portion of the volatility for the total portfolio at 7. bond yield levels and North American corporate profitability. As we have noted often in the last 15+ years.Top Picks Of 2011 . 23 . We steadfastly believe that making changes to asset allocation on an arbitrary and infrequent basis (i. Growth – Optimistic (In Local Currency) Source: CIBC World Markets Inc.25% standard deviation of returns.83% of the total portfolio returns of 9. +94%. for the S&P 500 since then) and.S. and Canadian equities. we would expect a portfolio with the growth-oriented investor profile to achieve a 9. Exhibit 21. 2011 according to our Scenario Analysis System (SAS) for asset allocation.

maximizing the Sharpe ratio (return to risk ratio) or maximizing the total portfolio variance. we might choose to maximize total portfolio variance in order to reduce the total perceived portfolio risk.S. Canadian bonds and U. our optimization techniques are creating thousands of combinations of portfolios in order to achieve the necessary combination and resulting asset mix for our return for various objectives. while calculating these returns in local currency terms. In the last example.January 17. is to use the forecast return and volatility of each asset class as well as the correlation between asset classes to see what asset mix is required for our objectives. We must stress that the recommended asset mix depends almost entirely on our forecasts. recommended asset mix varies from the one-year mathematically optimized version based on our own targets and assumptions. Max Return For A 10% Maximum Total Portfolio Variance Source: CIBC World Markets Inc. equities instead of our currently recommended 20% and 50% Canadian equities instead of 45%. we can optimize the portfolio based on maximizing return. 24 . 2011 Choice Of Optimization Using our SAS optimization techniques. however. Exhibit 22 shows our currently recommended exposure to Canadian equities. If we could simply set our asset allocation and leave it unchanged for an entire year and assuming that our year-end targets are all perfectly correct this would be the correct implied asset allocation for maximizing returns for the total portfolio. we do this to see how much our short-term.Top Picks Of 2011 . In our case.S. Optimizing the portfolio with the goal of maximizing returns at 10% total portfolio variance would also suggest that we reduce Canadian bond exposure from 35% currently to 15% while raising the AA Canadian corporate bond exposure to 20%. Exhibit 22. In every case. equities for our growth investor profile. currently. Maximize Returns For example. If our goal was to maximize return for a 10% maximum total portfolio variance over the next 12 months then we should hold 10% U. Our likely changes in the next few months should be guided by these optimized results. assuming our optimistic set of targets for 2011. The objective.

of course. If we optimize. this assumes that our targets for the various asset classes are correct. equity exposure to zero in favor of Canadian AA corporates. A more conservative asset allocation would resemble a constant 45% equities. therefore. 45% bonds and 15% T-bill mix. bond yields remain below the critical ceiling. 2011 Maximize Sharpe Ratio If we choose to maximize the ratio of return to volatility (risk and volatility are not exactly the same) rather than just maximizing portfolio return. Our Targets But Reducing Portfolio Volatility We note in Exhibit 21 that our current recommended asset location based on our 2011 targets implies a 9. In this case. Using A Growth Profile Allowable Range.January 17. then the recommended weights are found under the column heading Sharpe Max in Exhibit 22. Maximize Return For An 8% Maximum Total Portfolio Variance Source: CIBC World Markets Inc. however.26% return with a total volatility of 10.25% standard deviation of returns.Top Picks Of 2011 .S. For the purpose of this article. 25 . we want to consider what the recommended asset allocation would be if our goal were to limit the total portfolio variance. the portfolio based on the total volatility of 8% but incorporate our asset mix timing then the new recommended asset allocation is shown under the “Return Max” column heading (refer to Exhibit 23). the Canadian equity allocation remains at 45%. Exhibit 23. as long as U. Nonetheless. a large portion of our expected returns should result from Canadian equities. We know from other analysis that that would result in a total portfolio variance of approximately 8%. It appears that in order to reduce the variance of the total portfolio. the optimization system chose to reduce the U. it supports our conclusion that.S. the Canadian bond exposure would be reduced by 5% and AA Canadian corporate bond exposure would rise from 0% to 20%.

The sheer magnitude of these gains relative to a very conservative asset allocation.January 17. In August 2010.04% to 3. and rising stock prices in the U. 45% in bonds and 10% in T-bills.S. we published our Investment Strategy Committee Prequel asset mix document. in local currency terms. Bond losses in the Canadian bond portfolio were very slight at –0. 45% bonds and 10% cash asset mix. 2011 Recent Performance Since August 2010 We are optimistic about the rate of return for U.Top Picks Of 2011 . The combination of the rising bond yields in the U. we generated a significant 434 bps of outperformance in just four months compared with a fixed 45% equities. For example. we would have experienced far greater returns if we had been all stocks and no bonds but the prudent goal is to try and correctly adjust asset mix while generally maintaining a balanced portfolio. as long as the Fed can use the magic of quantitative easing to restrict the upward movement in the 10-year U. Given that the U. is enough to cause some concern in and of itself.S. would prefer to avoid. which could materially change our outlook for stocks and bonds in 2011.S.S. and Canadian equities.92% compared with 5% loss from 10-year U.S. Naturally. the 5% loss from U. bonds would have lost over 20% on an annualized basis. At the risk of being silly. our relatively traditional growth portfolio held a 35% exposure to Canadian bonds for the purpose of improving diversification. Treasury bonds.S. One of our near-term concerns stems from just how dramatic the recent gains were from our over-weighted equity exposure while the under-weighted bond portfolio recorded massive recent losses. Fortunately. to have some degree of prudent diversification. the annualized total growth portfolio returns from August to the present was roughly 27%.78% in a little over a four-month period. in fact. The reason for doing so is.S. our total portfolio returns for the growth investor profile amounted to 10. Such significant gains in such a short period of time are cause for concern. By maintaining the correct overweight recommendation for stocks and correctly underweighting bonds.S. In fact. while U. Our Overall Total Portfolio Returns Relative To Average Balance Portfolios Six of our seven investor profiles require that we maintain balanced portfolios of various degrees.S. entirely. and Canada resulted in massive outperformance from equities relative to bonds. otherwise. equity market has now risen 85% from the 2009 lows and bond yields have risen from 2. This also supported our decision to remain over-weighted equities in order to capture the anticipated gains in stock prices while simultaneously avoiding the bond losses. bonds that resulted in just the last four months of 2010 by having no exposure to U. the annualized return from U. Treasury. We have a long list of concerns with respect to exogenous risk factors. Our over-weighted equities exposure benefited the total portfolio return considerably and we managed to avoid. usually requiring that we have some exposure in asset classes that we.S. and especially given the significant incremental returns in a very short period of time. we 26 .33% during the same timeframe. in which we indicated that bond yields were unlikely to fall any further near term and. From August 2010 until recently the TSX rose approximately 15% and the S&P 500 rose approximately 21%. This is approximately 434 bps better than a portfolio with a fixed exposure of 45% in equities. generally. were more likely to rise significantly. equities between August 2010 and the present was approximately 61%. bonds in the growth portfolio.

2011 are becoming increasingly concerned about how far the North American equity markets can go from here. Based on a 14.02 0.67 17.02 0.28 3.S.95 3.42 0.39 0.384 / 90.16 3. as well as our gold and oil price targets and our Canadian dollar outlook are extremely dependent on the Fed’s ability to continue to successfully administer quantitative easing such that it can keep this stock market recovery intact.369 1.11 0. 2011 Forecasts TSX Earnings Top-down P/E (x) Bottom-up GPS P/E Median Weighted Average Street Fwd P/E (14.14 20.Top Picks Of 2011 . It is our current view that the TSX aggregate earnings will reach $830 as a result of further earnings growth in the materials and energy sectors and a slight recovery in the financial sector during 2011. As we have stated.41 15. repeatedly.01 - 12.03 1.01 1384 88 15.28 15.55) Trailing ROE Median Weighted Average Street Fwd ROE Median Weighted Average Trailing ROE Growth Rate & Fwd (GPS) Median Weighted Average Canada TSX Yield (market cap weighted) T-Bills (%) 10-year Bond Yield (%) U. Our global portfolio system indicates that the median and bottom-up weighted-average P/E based on current company prices divided by their one-year forward operating earnings would be 14.272 676 19.97-1.580 0.68 19.97 0. S&P 500 Yield (market cap weighted) T-Bills (%) 10-year Bond Yield (%) WTI Oil (US$/Bbl) Gold (US$/oz.800 / 870) Trailing ROE Median Weighted Average Street Fwd ROE Median Weighted Average Trailing ROE Growth Rate & Fwd (GPS) Median Weighted Average S&P 500 Earnings Top-down P/E (x) Bottom-up GPS P/E Median Weighted Average Street Fwd P/E (1.3 3.January 17.0065 0.800 TSX price target at year-end.) C$/US$ GPS data calculated through our Global Portfolio System Source: Bloomberg and CIBC World Markets Inc.44 1. Exhibit 24. Recent 13.46 93-103 1.83 times.18 15.11 2011 14.33 88. respectively.83 14.12 0.1 16.89 8.09 1271 79 16.98 12.6 17.13 2.01 14.03 27 . the resulting top-down P/E would be approximately 17.04 19.73 14.34 1.91 0.800 830 17.87 0.92x and 14x.78 0. therefore.92 14 17.34 1.01 2. our optimistic outlook for North American equities. Detailed Targets For 2011 Exhibit 24 provides more detail as to the basis for our 2011 targets.95 14.

73 times. but.S. dollar devaluation further if it can. another two to three years. The one-year forward ROE levels are roughly 200 bps to 300 bps higher than the current trailing ROE for the TSX. is emerging from recession. Although S&P 500 aggregate earnings are expected to rise from $79 recently to $88 by year-end 2011.S. This is really the test that the U. We believe that the U.8% level. however. Admittedly. we have far greater potential to witness growth in TSX ROE from much lower levels than those currently being recorded by the S&P 500.Top Picks Of 2011 . Since we anticipate some compression in multiple levels. We believe. and the Fed must find a way of sustaining the economic expansion and stock market rally for. as now. It is very difficult in a weak economic environment to make a case for the S&P 500 ROE growing robustly from the current very high weighted-average level of 20%. All things considered. We would also expect that given the structural characteristics of the TSX and a number of more favorable economic fundamentals in Canada. the resulting implied rise in the S&P 500 Index level should be on the order of 8% or 9%. ending in 2007. at least. Conclusion To summarize. The S&P 500 was recording stronger ROE growth at that time and profitability was at relatively higher levels. therefore. For example. but then. its actions are unprecedented. 2011 It is difficult to reconcile the trailing operating ROE on both the median and weighted-average basis with the one-year forward Street estimates of ROE. If P/BV ratios were constant. Crucially. If. so far. is a cause for concern. there is little or no evidence of ROE growth. We hope.S. at least. As long as S&P 500 ROE is stable and bond yields remain at satisfactory levels then a respectable rate of return is implied. just as the Fed probably does. the market tended to rise and fall over timeframes of about one-and-a-half to three-year intervals.January 17. we would expect the S&P 500 is capable of posting a 9% to 10% total return for the year. two years ago.S. too. economy begins to demonstrate evidence of self-sustaining growth and companies also begin to deploy the massive quantities of cash on their balance sheets. the key to sustaining the equity cycle was the fact that bond yield stayed in the desired range. namely quantitative easing. government is still determined to push the U.S. and given also that the U. 28 . The equity cycle which began in October 2002 extended through the next five years. however. Federal Reserve faces. a 12% internal growth rate in book value. it would be imprudent to simply set the asset allocation at the beginning of the year and not consider the possibility of significant changes to the asset mix throughout this year. this is not the case for the S&P 500 where the ROE levels are considerably higher than the TSX levels at present. that we begin during 2011 to see selfsustaining growth with stable interest rates similar to 2004. S&P 500 ROE can simply maintain the current 20% level then this would imply. our market should continue to trade at approximately 2 P/E multiple points higher than the S&P 500. Other than 1998 and the stock market low of 2009. 2011 could resemble 2004. the magic of quantitative easing is working.S. this would imply a 12% rise in the S&P 500 Index price. however. After adding in an S&P 500 dividend yield of approximately 2%. but it is hard to imagine a time when our view has turned so significantly on just one factor.384 S&P 500 target divided by $88 of earnings results in a top-down price earnings ratio of 15. if we drew parallels with the equity cycle which spanned the period from October 2002 to mid-2007. but it can only do this as long as the 10-year U. that during the next 12 months. This could change if the U. our 1. but there is no evidence that the S&P 500 ROE is expected to grow significantly from here. This. It would appear. Treasury remains below the 3. we remain optimistic about the outlook for North American equities. The current rally is now about 85% since the market low of 2009.

2011 TOP PICKS OF 2011 29 .Top Picks Of 2011 .January 17.

produces and recycles high-purity metals and compounds for electronic and solar applications.33A $0. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2011 ROE (E) LT Debt Preferred Common Equity Convertible Available Earnings per Share VNP supplies 60%-70% of First Solar's CdTe needs and is expected to directly benefit from its aggressive expansion plans.653 $329.9x 9.0M Nil / Nil May $2.7 million in cash and cash equivalents ($1. cash) and $1.Mahesh@cibc.77-$7. unless otherwise stated. Canada M5J 2S8 (416) 594-7000 Ian Tharp.21 3-5-Yr. Full contribution from its Firebird expansion is expected in Q1/F12. www. 161 Bay Street.4x 14.999% purity of its products.Institutional Equity Research Company Update January 17.. Toronto. CIBC World Markets Inc. 5N Plus is trading at an attractive valuation of 10. Daily Trading Vol.com All figures in Canadian dollars.50E 21. Price Target VNP-TSX (1/12/11) Key Indices: S&P/TSX Smallcap 25.2M No Current $8.ca Sumeet Mahesh 1 (416) 594-7293 Sumeet. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. 5N Plus has $56. Management expects to double the top line in the next three years on the back of its new Firebird facility and a ramp-up in sales to solar customers such as Abound and Calyxo.com . See "Important Disclosures" section at the end of this report for important required disclosures. We expect the company to continue to use these resources to pursue greenfield expansion and further acquisitions. EPS Gr.com and ResearchCentral.37E $0. where applicable. P. expects to expand capacity by 92% by 2012 to 2. the global low-cost producer of solar PV modules and 5N Plus' biggest customer.8x Source: Reuters Company Description 5N Plus develops. CIBC World Markets does and seeks to do business with companies covered in its research reports. 2011 Stock Rating: Clean Technology Sector Outperformer Sector Weighting: 5N Plus.50 is based on 15. CFA 1 (416) 594-7296 Ian.7x 2012E FD EPS. Investors should consider this report as only a single factor in making their investment decision. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.6M 27.ca Find CIBC research on Bloomberg.85 per Shr 12. Reuters.0% NA Nil $130.O. which is at a significant discount to the peer solar group at 16. Excluding Unusuals EV/EBITDA $0. Our price target of $8.0M Shrs 89.3x 6. First Solar. including potential conflicts of interest. Incorporated Shining Bright In The Land Of Cloudy Sky Market Weight 12-18 mo.5nplus. Rate (E) 52-week Range Shares Outstanding Float Avg.4x Stock Price Performance 2010A 2011E 2012E 10.09 per share) on its balance sheet and generates $15 million-$20 million annually in operating cash flow.09 in cash per share.74 GW annually.7% $4. Brookfield Place.0x F2012E FD EPS (ex.50 $7. 5N Plus is on an aggressive organic growth trajectory.35 45. As a result. 5N Plus draws its name from the 99.8x 19. Box 500. cash).cibcwm.6x F2012E FD EPS (ex. firstcall.Tharp@cibc. 2010 2011 2012 P/E 2010 2011 2012 Fully Diluted.

45 45.3x 4.6 $167.3 $80.5x 38.0 $16.0% 142.1) $12.62 $40.7 ($63.3x F2012E 13.50 17.6 $36.6% 77.7x 2.9 $22.8 $32. Management is targeting three main markets: i) the CIGSbased thin film solar market.2 $3.7% 30.2 $0.45 LTM EBITDA 10.8 $20. Sales to the solar industry represented 74.7% F2011E 0.2 ($16.0x 3.4 $2.76 2011E P/E 14. MBA 416-594-7296 416-594-7293 ian.4% in Q1/F2011 but below 85.1x 27.1x 46.1x 4.6x 3.6) ($8. except per share data Key Multiples 5N Plus Peers First Solar Operating Performance Return on Equity Return on Capital Employed Gross Margin EBITDA Margin Operating Margin Pre-tax Margin Net Margin Quality of Earnings Cash Realization Ratio1 P/FCF FCF Yield Implied Tax Rate Interest Coverage Income Statement Revenue Gross Profit SG&A R&D EBITDA Interest Expense Depreciation & Amortization EBIT Net Income EPS.0% F2012E 1.0x 3.3x 12. Company reports and CIBC World Markets Inc.4 ($60.2x 2.1 $4. CFA Sumeet Mahesh.4% 30.5) ($1.8) ($0.8 $125.9 $ 0.8x 17.21 Rating: $8.ca sumeet.0% 22.1% 113.1 $4.0% 24.tharp@cibc.1% 27.6% 40.6 $8.2% F2012E 17.9% Dividend: Yield: F2010A 25.2% 29.9 $7.7 $16.3 13. Through the Firebird acquisition.0% 20.7% 28.5% 35.37 46.7x 3.4% 31.9x $323.2) ($1.0 Revenues EBITDA EBITDA Margin Calculated as CFO divided by Net Income.2 ($8.0 50% 40% 30% 20% 10% 0% 2007A 2008A 2009A 2010A 2011E 2012E ($4.7 $0.0 $20.8 ($4.8x 43.6 $0. the above 70.ca LTM P/E 15.4% F2010A 1.4 $4.7x -2.2% Chart: Sales.9% 29. 5N Plus focuses on specialty metals such as Te.1 $ 0.0x F2011E 11.4% 29.Shining Bright In The Land Of Cloudy Sky .0% 32.4% of total sales in Q2/F2011.6x 21.2 14. Management indicated that sales into these markets have the potential to double its current annual revenues within the next three years.0) ($13.2 $5.50 46. 2011 5N Plus Inc.1 $15.6% 44.9 $0. (VNP-TSX) Current Price: $7.9 $25.9 $ 0.6) ($3.3 $2.2 $2.7) ($1.1 F2012E $22.2 $28.7x F2010A 12. Unusuals) FD S/O Cash Flow Operating cash flow Capex Changes in working capital Free Cash Flow2 FCF per Share Balance Sheet Cash Total debt Equity Net debt (Cash) Net debt per share Net debt/EBITDA Book Value Per Unit (FD) 1 2 Sector Outperformer Ian Tharp.1x $3.1x 3. We estimate these markets to be in excess of $380 mln in size with prospects of substantial future growth.0 $46.6x $329.3% 29.14) -2.27 F2010A $68.5) Investment Thesis 5N Plus develops and produces high-purity metals and compounds for electronic applications and offers related recycling services.2 ($68.9x F2009A 18.0 F2012E $73. ii) the semiconductor wafer market and iii) the germanium market.6 F2010A $16.4x F2012E $104.19) F2011E $57.7x 15.3 $1.7% 41.6x 10.1% F2009A 0. Diluted (Ex.39) -2.1x 18.4x 10.7x -2.0 $0.2x 19.2% 45.1x $324.0 $0. 5N Plus products are utilized in a number of electronic applications including Thin-Film photovoltaics (PV) and the radiation detector market.7 $0.8 $31.4 $35.0x 20.0% 34.4 $0.8x $2.5x 1.0% F2011E 23.2% 50.1x $2.33 45.2% 45. 31 .January 17.4x -37.8 $8.3 $2.5) ($1.5 $21.2x 13.35 $60.7% 31. Cd and Se and on related compounds such as CdTe and CdSe.9% 31.To 18-Month Price Target: $8. Calculated as CFO less Capex Source: Bloomberg.1 F2011E $7.00 0.4 11.5x 4.7) ($6.7% 76.9 $22.2x F2011E $81.21 12.2 $28.0 $4.3x 4.8 $35.49) -1.3% 41.9x $3.50 All Figures in CAD$ millions. The recent equity investment in Sylarus has further strengthens this effort.8x F2010A $70.1 $1.4x 4.2x F2009A $69. Source: Company reports and CIBC World Markets Inc.3 $2.7) $100.6 $143.1x 2.3 9. Valuation & Outlook Current Price: Price Target: 12-18 Mo Return: Price Target Represents: P/E: P/E (less cash): Enterprise Value: EV/EBITDA: EV/Sales: P/BV: FCF Yield: $7.8% 27.17 F2009A $65.5 ($52.9% F2009A 18.1x 12.1% SO $0.32) -2.mahesh@cibc.9 $23.Its favorable cash position should allow for growth through Greenfield expansions or acquisitions.8% 18.9) $7.9 $ 0. EBITDA & EBITDA margin $120.8x $339.2% in Q2/F2010.11 2011E EBITDA 9. 5N Plus continues to be well capitalized .5 $112.9 F2009A $16.8 ($6.7% 23.3% 21.

2011 Source: CIBC TrendSpotting Matrix.Shining Bright In The Land Of Cloudy Sky . Bloomberg 32 .January 17.

ca Mike Woodward. Toronto. CA 1 (403) 216-3404 Mike. as well as a solid ability to control cost.0 $110. unless otherwise stated. 7.500 Boe/d today).93E $1. Daily Trading Vol.20 71. 2011 Stock Rating: Oil & Gas .0M $8. Results from the initial five wells have been impressive.2x grp) and at 96% of our Risked NAV (vs.7x Stock Price Performance DACF ($ mlns.5 7. CIBC World Markets does and seeks to do business with companies covered in its research reports.2 9. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. The emerging focus for the company has been the Viking light oil play in Harmattan. 89% grp). Box 500. including the Wilrich. with Angle having up to 195 potential new drilling locations. P.8x 2011E EV/DACF (vs. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.com . providing the company with a number of light oil and gas targets to develop.com/ All figures in Canadian dollars.O.1X $167. Reuters.87 Angle Energy is an intermediate-sized E&P company (~13. We believe Angle will start to trade at a premium over the year with continued success in the Viking. While Angle has better-than-average exposure to multiple high-impact developments. Market Weight 12-18 mo.5M 60. As a result.Institutional Equity Research Company Update January 17.) 2009A 2010E 2011E EV/DACF 2009 2010 2011 $40.5x 5.com and ResearchCentral.4 $65.1x Source: Reuters Company Description Angle Energy Inc.7x 8.ca Find CIBC research on Bloomberg. 161 Bay Street.25 $7. CFA 1 (403) 216-3405 Adam. is a natural gas-weighted junior E&P company with operations focused in west central Alberta that was founded in 2004 and went public in 2008.000 Boe/d of light oil and liquids-rich gas.2x 7.Gill@cibc. which posted a marked increase in industry activity over 2010.000 $562. Price Target NGL-TSX (1/12/11) Key Indices: None 17. its valuation today is at 6. By 2012. The company's asset base is concentrated in the prolific west central Alberta area.7M Nil / Nil December 11. CIBC World Markets Inc. Angle is also developing a Cardium light oil play (last well tested at over 1. firstcall. Looking Towards Continued Success In Emerging Central Alberta Viking Play $9.Intermediate & Junior Producers Sector Outperformer Sector Weighting: Angle Energy Inc.90A $0. Canada M5J 2S8 (416) 594-7000 Adam Gill.5X No Current Projected Total Return 52-week Range Shares Outstanding* Float Avg. See "Important Disclosures" section at the end of this report for important required disclosures. production from this play could reach 5.4M Shrs 290.39E 8.angleenergy.9x 11.200 Boe/d) and a number of gas resource plays.Woodward@cibc. Brookfield Place.35 per Shr 1. Market Capitalization Dividend/Div Yield Fiscal Year Ends P+P RLI (years) 2011 EV/DACF Net Debt Net Asset Value Net Debt/CF Convertible Available *Basic Cash Flow Per Share 2009 2010 2011 P/CF 2009 2010 2011 $0.5% $6. Investors should consider this report as only a single factor in making their investment decision.. including potential conflicts of interest.cibcwm.71-$9. www. where applicable.

2 59% 54% 11.Announced operational update and 13. for recent acquisitions and equity issues). including acquisitions).0 $163.Current Total Credit Facility Unutilized (% Of Capacity) .) Hedging Gains / (Losses) Royalties Operating Costs Operating Netback G&A Interest Cap Tax/Other Cash Flow Netback $61.87 12.08 $4. 7) Year operating netbacks divided by reported P+P FD&A cost.06 $8. Hoskin & Harcourt LLP CFO.003A 7. Crossfield. Source: Company reports and CIBC World Markets Inc. Osler.42 $3.Announced $25 million bough deal equity financing Oct 20/10 . Oil & Gas CEO.22/share versus the group average of 1.woodward@cibc. Crossfield.Released Q3/10 results Oct 21/10 . FD&A Cost . Encal Glen Richardson VP. FDC) Cash Basis Recycle Ratio (Incl FDC) 7.9 2. Key Assets: Key assets are the Viking drilling inventory of approximately 195 wells in the Harmattan area.290A 10. Net debt includes convertibles and is based on most recent quarterly balance (adj.5 $16.3x $75.0x) Group Average Total Credit Facility .com 2011E NGL 5. group at ~$9. Engineering Harvest. Avid Elizabeth More VP. Sproule Graham Cormack VP.3x 6.7x 1.2x.January 17.Month Price Target: C$9.0 $73.7 (41%) Production Production (Boe/d) Q1 Q2 Q3 Q4 FY Growth % Gas Per-Share Growth 2009A 7. $44.446A 7. FDC. Key Stock Catalysts and Asset Overview Investment Thesis: We have a Sector Outperformer rating on Angle with a 12-18 month target price of $9.250E 48% 58% 31% 2011E 16.8x $54.18A $0.382 $36. 2011 Angle Energy Inc (NGL .48E 55% Commodity Assumptions WTI Oil (US$/Bbl) Edmonton Par Oil (C$/Bbl) Henry Hub Gas (US$/MMcf) AECO Gas (C$/MMcf) Exchange Rate (US$/C$) Netback Analysis ($/Boe) Gross Revenue (Net of Trans.55/Boe).37 $3. Fekete Stuart Symon VP.000 2010E P/CF EV/DACF EV/Boe/d EV/Boe .2x 11.0x.49) $17. Ret.01) $14. Exploration Flagship.com Mike Woodward.026E 9.25) $23.20A $0.55 $4.552A 7.5x 11.5 $147.500 Boe/d production goal Nov 10/10 . E3 Energy.600E 28% 62% -11% 2010E $0.2x $74.31) ($0.48) $0. Enterprise Value Distribution (Current) / Frequency / Yield Average Daily Trading Volume (50 Day) .98 ($2. 5) Equals cash distributions/dividends divided by cash flow.3) Total Debt / CF (Y/E Debt To Year CF) (1.75 $4.11 $85.21A $0.9707 2010E $33.6%) Name Position Recent Positions Gregg Fischbuch CEO Brooklyn.5 $563 $167 $729 n/a 290.51 $77.90A $1.09) ($0.27A $0. Finance & C Lightning.8x (versus the group averages of 89% and 7.00 $20. ATB and BMO 2009A Cash Flow from Operations $40.085 Group 6.24A $0.528A 58% 2010E 8.Years 6.74 $14. Brooklyn.25 Capitalization And Market Statistics Share Price Shares Outstanding 1.P + P 3.61 $79. TriGas Heather Christie-Burns President & COOCrossfield.Current Reserves Information Reserve Engineers: GLJ Petroleum Consultants Year-end 2009 Reserves (MMBoe) Proved Developed Producing Total Proved (1P) Proved + Probable (2P) PDP % of Total Proved Total Proved % of P+P 2P Reserve Life .gill@cibc.Announced completion of $25 million flow-through financing Nov 2/10 . Angle Energy President & CEO.8 $106.472A 7. Land Yangarra. 2. 6) Y/E P+P reserves divided by Q4 annualized production.99 $0.75 $0. Enterprise value to reserves (based on current reserves.76 $21.05) $17.25/share as Angle has best in class operating costs (2011E $6.03 ($2.24) ($4.25/Boe vs.37) ($1.4 $187.2 Development Spending 5.72 $0.95E 6% 2011E 14.94 $3.3 Total Net Debt at Year-end ($38.662 $26. 2010E 2011E $60.591 Investment Thesis. Penn West. AGS Capital Management Partner.8768 2009A $28. CA: (403)-216-3404 / mike.4x 1.5x $180.37) ($6.00 ($9.645A 7.00 $84. Core NAV Risked NAV P/Risked NAV P/Risked NAV (Group Average) Fiscal Year End NGL 8. Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues). Encal. Financial Flexibility ($MM) Bankers: CIBC.021A 13.TSX Only Relative Valuation $7. CFA: (403)-216-3405 / adam.Proven 3. EV/Boe .53 Group 9. and tight gas assets at Edson.9700 2011E $39.0 $150.73 ($2.P+P (incl.Announced completion of $60 million public offering of convertible debt Dec 16/10 .2x 7. Encal Heather Post Controller PwC.1x target multiple to our Risked NAV of $8.To 18.28E $0.00 ($7.05) ($1.99 $66.0x $106.21) ($0.49) ($6. Key Catalysts: Catalyst for Angle include continued drilling success by the company and industry in the Viking light oil play in Harmattan and Falher/Wilrich tight gas play in Edson. * Reserves are updated for acquisitions/divestitures. Relative Valuation: Angle is currently trading at a Price to Risked NAV ratio of 96% and a 2011E EV/DACF multiple of 6.35 $0. Amoco Matthew Mazuryk VP. and its asset portfolio has exposure to both high impact natural gas (Falher/Wilrich) and oil (Viking/Cardium) development opportunities.00) $20.25/share is based on a 1.45 Recent News Jan 6/11 . Operations E4 Energy. Penn West.2 27. 34 .3 50. Canoe Capital Notes: 1.99 $0.22 96% 89% December Sector Outperformer Adam Gill. 3. Barnwell of Canada Directors Name Edward Muchowski John Gareau Clarence Chow Noralee Bradley Timothy Dunne Gregg Fischbuch Jacob Roorda Principal Occupation Independent Businessman Independent Businessman President.TSX) Current Price: C$7. Our 12-18 month price target of $9.54 $4. Market Capitalization Net Debt 2.76 $0.36 ($7. respectively).24A $0.04 1.0x Cash Flow Per Share CFPS (Diluted) Q1 Q2 Q3 Q4 Diluted Growth 2009A $0. 4) Excludes net acquisitions.Announced operational and reserves update Management (Ownership: 9. Cardium and Ellerslie rights in Ferrier.87 71. incl.7x 1. We also see Angle as a safe way for investors to get exposure to natural gas given the company's solid operating cost and the high liquids content of its gas production. KPMG.20A $0.Looking Towards Continued Success In Emerging Central Alberta Viking Play .

35 . Bloomberg. 2011 Source: CIBC Trendspotting Matrix.January 17.Looking Towards Continued Success In Emerging Central Alberta Viking Play .

unless otherwise stated.0M No Current 3-5-Yr.4x 8. In our view.S.S.com .ca Find CIBC research on Bloomberg.6M Shrs NM $356. including potential conflicts of interest. at a slight premium to the average for its peer group. Reuters. Toronto.9% December $11.6M $1. 10-106661 © 2010 CIBC World Markets does and seeks to do business with companies covered in its research reports.7M Nil $195. In our view. EPS Gr.Fetterly@cibc.) 2009 2010 2011 EV/EBITDA 2009 2010 2011 $35.9E 11.4M 10.ca Jon Morrison 1 (403) 216-3402 Jon.0x Stock Price Performance Cash Flow Per Share 2009 2010 2011 P/CF 2009 2010 2011 $2.08 / 4.Morrison@cibc. Market Weight 12-18 mo. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2009 ROE (E) Net Debt Preferred Common Equity Convertible Available EBITDA ($ mlns. P. Black Diamond is trading at 6. Daily Trading Vol. Rate (E) 52-week Range Shares Outstanding Float Avg.cibcwm.blackdiamondlimited.O. Black Diamond has developed a strong competitive position in remote workforce accommodations in the oil sands and is well positioned to gain additional contracts as future projects are awarded. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.. Price Target BDI-TSX (1/12/11) Key Indices: None NM $16.00 $21. where applicable. firstcall.2x 2011E EPS and 6.3x 8.1x 6.3x 2011E CFPS.com and ResearchCentral. we would not be surprised to see Black Diamond secure additional oil sands awards in coming months and expand its 2011 capital program. Canada M5J 2S8 (416) 594-7000 Jeff Fetterly. 161 Bay Street. 14.00-$22. Box 500. We expect oil sands capital investment to accelerate in the coming years.33A $2. www.7E $66. CIBC World Markets Inc.66E $3.02 16.Institutional Equity Research Company Update January 17. We have a Sector Outperformer rating on the company.4A $49. Investors should consider this report as only a single factor in making their investment decision. As a result. See "Important Disclosures" section at the end of this report for important required disclosures.72 Black Diamond is a leading provider of remote workforce accommodation and workspace solutions in the WCSB and regionally in the U.45E 9. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. In addition to the recent award of a long-term rental agreement for an 800person remote accommodation project with Suncor Energy.2x 6. 2011 Stock Rating: Energy Equipment & Services Sector Outperformer Sector Weighting: Black Diamond Group Limited Accelerating Oil Sands Development Will Drive 2011 Performance $24. Brookfield Place.88 per Shr 9. CFA 1 (403) 216-3400 Jeff.6% $49.3x Source: Reuters Company Description Black Diamond Group Limited is a provider of remote workforce accommodation services and work space solutions throughout the WCSB and regionally in the U.com All figures in Canadian dollars.4x 2011E EV/EBITDA. the company is well positioned to benefit from increased capital spending in the Canadian oil sands and from accelerating resource play development.

morrison@cibc.65 2009 $75.08 2.9 ($3.7 $1.37 2010E $136.8 $10.ca Jon Morrison | (403) 216 .6 $0. Source: Company reports and CIBC World Markets Inc.95 2010E $1.6x $11. In our view.6 $170.40 1.7 $3.3402 | jon.4 $2.2x 20.4 $2. and (3) a robust and visible pipeline of growth opportunities. including: (1) exposure to a business and competitive landscape with attractive fundamentals.7 $15.67 $0.3x 14.7 $73.43 $59.26 Q3/09 $16.4 $1.6% Black Diamond has established itself as one of the leading remote accommodation providers.5 $2.5) $31.2 $136.2x $10.14 % Y/Y 87% 65% 60% 57% 32% 33% 38% 41% 38% 42% 31% 34% 31% (1) Adjusted for stock-based compensation and one-time items.00 Company Description 2008 $43.3400 | jeff.7 2011E $101.45 $3.20 Space Rentals 30% Workforce Accommodations 57% Energy Services 13% Distribution Analysis 2008 Dividends Per Share Cash Flow Analysis Cash Flow from Operations Less: Maintenance Capital Distributable (Free) Cash Flow Dividends Paid Out CFPS (fd) Distributable CFPS (fd) Payout Ratios Dividends / Cash Flow Dividends / Free CF $1. and Energy Services.0) $54.51 $33.3% 2010E 8.fetterly@cibc.4 $75.8 ($5.3x 15.ca $21.9 $25.7 57% $12.72 $24.0 $1.16 Gross Margin Gross Margin % EBITDA (1) EBITDA % Cash Flow From Operations (2) CFPS (fd) EPS (fd) (2) $31.2 $17.3 $10.8 $18.8 $26.8 47% $7.4x 6. Workforce Accommodations.94 1.4 40% $11.4 $20. CFA | (403) 216 .2x 20.53 Key Operating Statistics (Current Quarter) Reported Q3/10 Total Revenue $32.8 64% $7.0 2010E $79.2x 9. Space Rentals. 37 .8 $1.13 $46.6 $7.6 2009 $45.January 17.6% 8.5 $17.6 $2. (2) a proven management team that has extensive experience operating within its business.1% 12.63 $2.0 $24. The company has three business segments.4 $0.3 Investment Thesis 2008 8.06 2011E $1.8 ($1.9 $18.8x 13.3 $1.0) $30.7 $21.3 $66.23 2009 $0.8x 9.9x 15.1 ($4. the company offers several key attributes for oilfield services investing.7 $10.6x 8.8 $49. Black Diamond Group is an established provider of remote workforce accommodation services and work space solutions throughout the Western Canadian Sedimentary Basin (WCSB) and regionally in the U.6 ($0.6 $34.4 $1.4 $14.05 2011E $170.7 $49.3x 13.58 $0.66 $2.0% 2011E 6.5 $9.1% 16.0% 2009 9.6 $20.0 $35.0) $42. (2) Based on adjusted fully diluted figures.25 1.S.2 $28.9 $12.1 $17. Chart 1: Revenue By Geographic Segment (2010E) 2008 $73.1% 10.2x $12.33 $2.Accelerating Oil Sands Development Will Drive 2011 Performance .8x $11.0 $40.4) $19. 2011 Black Diamond Group (BDI-SO) Current Share Price: 12-18 Month Target Price: All figures in C$ millions except per share data Segmented Revenue Breakdown Workforce Accommodations Space Rentals Energy Services Total Key Financial Metrics EV/EBITDA P/CF P/E (1) BVPS P/Book ROE ROIC Income Statement Revenue EBITDA Depreciation & Amortization EBIT Net Interest Expense Tax Expense (Recovery) Net Income (1) EPS (fd) (2) Sector Outperformer Jeff Fetterly.4 $10.0 $19.8x 8.8 $4.8 $2.1 $41.9 $13.4 $20.

38 .January 17. Bloomberg. 2011 Source: CIBC TrendSpotting Matrix.Accelerating Oil Sands Development Will Drive 2011 Performance .

Brookfield Place.20 for the CSeries. including potential conflicts of interest. Investors should consider this report as only a single factor in making their investment decision.5% C$4. as the large business jet market represents approximately 80% of its business jet sales.ca Find CIBC research on Bloomberg.24 1. Commercial Aircraft. Price Target BBD. Systems and Signaling for the rail public transit sector).00M $3.50 for BA and C$1. Rate (E) 52-week Range Shares Outstanding Float Avg. Industry surveys continue to suggest favorable demand for the CSeries over the next few years.25-C$6.B-TSX (1/12/11) Key Indices: Toronto 26.0M Shrs 5.728.0M $347. CFA 1 (416) 594-7285 Michael.29 per Shr 15.00 price target is based on C$3.7% $1.00 C$5.O. Order activity at BA has picked up in recent weeks. As a result. CIBC World Markets Inc.674 $9.9% January $2.481. 161 Bay Street. Reuters.41E 14.0M No Current 3-5-Yr.(C$0.. investors should start to generate strong interest in the stock once again.com .763. Bombardier Aircraft Orders Starting To Pick Up. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Continued strength in emerging market economies (particularly China and the Middle East) is resulting in strong international demand for long-range business jets.30 for BT.446.459. firstcall.3x Stock Price Performance Source: Reuters Company Description Bombardier Inc. Our C$7. Customer Services and Flexjet/Skyjet) and Transportation (Rolling Stock.Institutional Equity Research Company Update January 17.Galison@cibc. Daily Trading Vol.37E $0. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Box 500. Toronto. CSeries Risk Well Priced In C$7. Services.2M C$0. Specialized and Amphibious Aircraft.39 BBD has two reportable manufacturing segments: Aerospace (Business Aircraft.com All figures in US dollars.bombardier. where applicable. If the business jet operations can return to a book-to-bill ratio of 1:1 in Q1/F12.cibcwm. BA has received orders for 15 business jets and 15 commercial aircraft.39A $0. www.10 / 1.986:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports. unless otherwise stated.ca David Galison 1 (416) 956-3548 David.Willemse@cibc. So far in Q4/F11. BBD remains optimistic about order activity and execution of the CSeries launch. See "Important Disclosures" section at the end of this report for important required disclosures. P.991. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2010 ROE (E) Net Debt Preferred Common Equity Convertible Available Earnings Per Share 2010 2011 2012 P/E 2010 2011 2012 $0.0M 1. EPS Gr. C$2.8x 13. Canada M5J 2S8 (416) 594-7000 Michael Willemse.com and ResearchCentral. BA is well positioned to benefit from this. is an internationally diversified manufacturer supplying aerospace and rail transportation equipment and services. 2011 Stock Rating: Aerospace & Defense Sector Outperformer Sector Weighting: Bombardier Inc.0x 14. Market Weight 12-18 mo.

Aerospace (Business Aircraft.9x $2. Growth for business jets beyond F2013 will likely benefit from the introduction of the F2013 E Learjet 85.8% 4.6x 9. 17.7% 17.574.7 F2012 E 152 94 5 Q3/F11 A Q3/F11 A F2013 E 183 105 5 SO Price Target Represents: F2013 E P/E: $1.0 $3.570.7% 4.054.6x 2.2 $66.020.980. albeit at a moderate rate. CFA David Galison.9x 5.0x 0.galison@cibc.5 $8.7x 15.0 $346.442 10.2x 69.3% F2013 E 12.9% F2011 E 19.5x 12.653.460.0 $0.2 $994.9 $1.743 Commercial Aircraft Amphibious Aircraft * Current Backlog .1x $2.405.4x 7.7% F2012 E 1.7x Transportation (Rolling Stock.9 $1.0x 1.2 $845. Bombardier's diversification strategy has allowed 7.41 1.5% 23.0 $68.269.743 F2012 E $1. *Bombardier Fiscal Years Ending January 31.92 0.0 $0. BA has been negatively impacted by 9.621.9 $4.0 $1. 7.751.0 $712.842.2 $8.304.73 Sector Outperformer C$5.2 $0.4% the company to offset weakness in one area with other segments that have a more stable growth 6.4% cyclical swings in the aerospace sector.0 $176.5% 4.2% 8.0 $4.8x 6.7 $1. Customer Services and Flexjet/Skyjet) and 8.09 F2012 E $3.37 1.336.Cont.9852 F2012E EBITDA Investment Thesis 12-Jan-11 F2011E P/E 14.8x 57.4 $2.3 $0.755 F2010 A $1.3x Bombardier has two reportable manufacturing segments.6) EV/Sales: $563.02 1.0 $4.39 C$7.9x C$13.6x 1.0 $698.2 $9.39 1.236. except per share data unless otherwise stated Key Multiples Bombardier Aerospace Companies Diversified Manufacturers Transportation Companies Historical P/ 1yr EPS Historical EV/TTM EBITDA Operating Performance Return on Equity Return on Capital Employed EBITDA Margin EBIT Margin EBT Margin Net Margin Quality of Earnings Cash Realization Ratio1 P/FCF FCF Yield Effective Tax Rate Interest Coverage Income Statement Revenue .7x F2012E P/E 13.1x 4.08 F2011 E $3.5x 12.1 $2.743 F2011 E $1.3) $137.0 $346.1x 0.0 $915.0 $958.500 $1.4 $0.103.3 $66.5% 12% 10% 8% 6% 4% 2% 0% F2005 A F2006 A F2007 A F2008 A F2009 A F2010 A F2011 E F2012 E F2013 E F2010 A 176 121 5 F2011 E 149 97 5 $16.1x 11. Management intends to maintain a diversified product strategy with a continued focus on the rail and aerospace markets.1x $2.0 $347. FD EPS.175.0x Aircraft.7% 3.Aerospace *Current Backlog .7x 9.2% 5.4x C$13.Transportation *US$ bln Valuation & Outlook Current Price: Price Target: 12-18 Mo Return: C$5.0) $456.3 $3.7x 2.00 29.606.0x Aerospace: the major growth driver for regional jets beyond F2013 will be reflected by demand from the CSeries.0 $0. 2 Calculated as CFO less Capex Source: Bloomberg.0 $655.0 ($767.9 $1.0 $1.0x 0.037.10 0.175.5 $3. MBA 416-594-7285 416-956-3548 michael. Unusuals) FD S/O Cash Flow Operating cash flow (ex WC) Capex Working Capital Investments Free Cash Flow2 FCF per Share Balance Sheet Cash And Equivalents Total debt Equity Minority Interest Preferred Value Net debt (Cash) Net debt per share Net debt/EBITDA Book Value Per Unit (FD) 1 USD:CAD 0.6 $5.0 $9.0 $3.5x 16. (Ex.773.8% 3.0x F2011 E $17.4x F2010 A 18. Bombardier is actively seeking to grow by providing new products in the 4. Fiscal 2011 = Calendar 2010 for comparative purposes.7% F2011 E 1.6) EV/EBITDA: ($216.1 $0.017. EBITDA EBITDA Margin EBIT EBIT Margin 40 .223. However.442 9. F2013 E 1.4% 4.0% 5.0 $1.304.3) ($42.5 $0.ca david.B-TSX) Current Price: 12.2x 4.32 $3.596.4% and demand profile.2 $32. Oper.Consolidated Gross Profit EBITDA EBIT EBT Minority Interest Net Income .380.9 $66. We expect that business jet demand will begin to recover in calendar 2011.7% 22.4 $0. Company reports and CIBC World Markets Inc.40 F2012 E 15.3% 6.ca All Figures in USD$ millions.8x $3. 2011 Bombardier (BBD.366.71 0.7% 27.162.0 $346.To 18-Month Price Target: F2011E EBITDA 9.2 $1.4x 1.500 $2.2% 18.8x 8.7% Transportation has been somewhat sheltered from the economic downturn.6% F2010 A 0.442 7.6x 1. Systems and Signaling).January 17.0 $4.0% 16.9x F2010 A $19.763.098.7% 8.604.4% company’s traditional markets (North America and Europe) as well as through an increased focus on emerging markets such as Asia.1% 5.4% 21.6% 8.171.2 ($1. given that large-scale transit infrastructure is typically funded by the public sector.0% 5.7) ($365.20 P/BV: FCF Yield: $2.824.1 $1.0 $5.1% 3.0 $1.3x F2012 E $19.7% 3. Services. CSeries Risk Well Priced In .39 Rating: C$7.Bombardier Aircraft Orders Starting To Pick Up. Specialized and Amphibious Aircraft.8 $0.164.5x 12.00 Michael Willemse.215.willemse@cibc.55 1.769.8x 3.8 ($1.5 $1.2x 17.663.0 $1.9 Enterprise Value: ($1.1% F2012 E 17.000 $500 $0 F2013 E Consolidated Chart Calculated as CFO divided by Net Income. Commercial 8.8x 21.26 F2010 A $4.3x C$13.9% 28.5) $165.565.000 $1.6x Deliveries (units) F2013 E Business Aircraft $21.5x 13.9 $5.5 $0.15 F2011 E 15.666.0) ($671.

2011 Source: CIBC TrendSpotting Matrix.Bombardier Aircraft Orders Starting To Pick Up.January 17. CSeries Risk Well Priced In . 41 . Bloomberg.

73 54.85 per Shr NM $69.Nielsen@cibc.com/ All figures in US dollars.ca Paul Nielsen 1 (403) 216-3403 Paul.021 $656. It approved a 2011 capital investment budget of $130 million to $145 million. bringing our price target to C$15. including potential conflicts of interest. As a result.514 gross acres in nine E&P blocks and produces ~7. Price Target CZE-TSX (1/12/11) Key Indices: TSXOilGas NM C$6. www. The Right Ingredients For Success Market Weight 12-18 mo. Middle Magdalena and Putumayo basins of Colombia.to 18-month price target of C$15.(C$0. EPS Gr.com and ResearchCentral.ccenergialtd.75.70-C$12.5x 7.75. 2010 2011 2012 P/CF 2010 2011 2012 $1. Management expects that 2011 production will range from 7. 1 (403) 260-8675 Ian.cibcwm. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.0M Shrs 65. development and production of oil resources in Colombia. Box 500.1x Stock Price Performance Source: Reuters Company Description C&C Energia Ltd.985:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports.87E $1.0M Nil / Nil December $15.7x 6. 2011 Stock Rating: Oil & Gas . CZE is relatively undervalued considering the magnitude of its upcoming exploration program. In our view.68/FD share in risked upside (C$20. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Reuters.17/FD share. P. P.Institutional Equity Research Company Update January 17.56E $1. firstcall. Market Capitalization Dividend/Div Yield Fiscal Year Ends Net Asset Value 2011 ROE (E) Net Cash Preferred Common Equity Convertible Available Cash Flow Per Share We recently initiated coverage of C&C Energia with a Sector Outperformer rating and now have a 12. which could be realized from 2011 exploration drilling. Canada M5J 2S8 (416) 594-7000 Ian Macqueen. CZE's operations are focused in the Llanos. CIBC World Markets Inc. including development of the producing assets.Macqueen@cibc. is C$7. where applicable. Toronto.3M 29. is an independent oil and gas company engaged in the exploration.90 3-5-Yr. Rate (E) 52-week Range Shares Outstanding Float Avg. 161 Bay Street.23/FD share unrisked).. acquisition.75 C$11.300 Bbls/d from the Cravoviejo and Cachicamo blocks.53M Nil NM No Current C$15. We have also included C$8.69E 7. Brookfield Place. Investors should consider this report as only a single factor in making their investment decision.Geol. CZE has identified 30 prospects and leads and plans to drill 15 exploration wells in 2011. The company has a 77% average working interest in 766.000 Bbls/d from two of its four Llanos Basin blocks.International E & P Sector Outperformer Sector Weighting: C&C Energia Ltd. See "Important Disclosures" section at the end of this report for important required disclosures. Our base NAV estimate for CZE. Daily Trading Vol. unless otherwise stated.com .000 Bbls/d-7.ca Find CIBC research on Bloomberg.O.

Macqueen@cibc.Debt Adjusted Financial Statistics .$M Net Debt . P.842 5.4 0% 128 (16%) 141 2012E $111 $111 $92 $1.ca 2010E C$11.00 / 0.56 $32 $0.00 $4.10% C$27.mm Average Trading Volume (50 Day) Annual Dividend / Yield Sector Outperformer Analyst: Ian Macqueen.5x 8.$mm Net Debt/Cash Flow Net Debt/EV Valuation EV / DACF Target EV / DACF P/CFPS Target P / CFPS Source: Company reports and CIBC World Markets Inc.$mm (except per share values) Colombia EBITDA Total EBITDA Total Company Operating Cash Flow (US$mm) CFPS (Diluted) Operating Income Operating EPS (Diluted) Net Capex Net Capex/Cash Flow .97 2012E 6.6x 9.January 17.7x) (0.5x 0.842 5.541 7.541 7.1x 9.64 $83 107% ($5) 2010E ($56) (0.72 $145 143% ($43) 2011E ($13) (0.6x 2012E $85.021 C$0.The Right Ingredients For Success .0% Associate: Paul Nielsen.Nielsen@cibc.8 0% 117 nmf 130 2010E $81 $81 $78 $1.87 $39 $0.97 2011E 7.40 P/NAVPS (Unrisked) 43% Target P/NAVPS (UnRisked) 57% CIBC Deck NYMEX WTI (US$/bbl) NYMEX Gas (US$/mcf) FX (US$/C$) Operating Statistics Colombian Natural Gas Production Natural Gas (mmcf/d before royalties) Colombian Oil Production Oil & Liquids (bbl/d before royalties) Production (mboe/d before royalties) Natural Gas % Production Per Share (boe/d per MM FD) Production Growth Per Share .00 $4.50 $0.9x 7.% Free Cash Flow Debt Analysis Net Debt .5 0% 151 29% 167 2011E $120 $120 $102 $1. Ph: (403) 216-3403 E-mail: Paul.1x 2012E 7.352 6.Geol.90 50 C$593 (C$57) C$536 29 65.4x 6.7x 10.ca Net Asset Valuation .1x) (0.4% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .$M Float .50 $0.0x 9.51 $4.% Production Per Share (boe/d per MM FD) .618 Total Unrisked NAVPS .2x 2011E $85. 2010E $79.69 $39 $0.2009 Total Risked Asset Value C$936 Total Risked NAVPS .97 2010E 5.5x 7.352 6. 2011 C&C Energy Ltd.0x) 2011E 6. (CZE-TSX-V) Current Price: C$11.85 P/NAVPS (Risked) 75% Target P/NAVPS (Risked) 99% Total Unrisked Asset Value C$1.1x) 2010E 7. Ph: (403) 260-8675 E-mail: Ian.$mm Enterprise Value .10% C$15.75 Target Return: 32.90 Price Target: C$15.72 $150 163% ($58) 2012E $45 0.37 $0.4x 43 .3x 8.

continues to play catch-up. Toronto. www.cibcwm. As a result. CFA 1 (416) 956-6766 Jacob.5% $49.389.08 / 1. Rate (E) 52-week Range Shares Outstanding Float Avg.O. CIBC World Markets does and seeks to do business with companies covered in its research reports.8M No Current $78.41E $5.Bout@cibc.ca All figures in Canadian dollars. where applicable. It provides freight services across Canada from Montreal to Vancouver and into key centers in the US Midwest & Northeast. 2011 Stock Rating: Transportation Sector Outperformer Sector Weighting: Canadian Pacific Railway Limited Rail With Option Value Market Weight 12-18 mo.com . With ~20% of CP's 2011 capital program focused on growth initiatives.04 per Shr 11.ca Find CIBC research on Bloomberg.com and ResearchCentral. We estimate that every 1-point change in operating ratio is equivalent to $0.ca Kevin Chiang 1 (416) 594-7198 Kevin.50 168.03E 17. EPS Gr. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.4x 15. metallurgical coal.0M Nil $5. See "Important Disclosures" section at the end of this report for important required disclosures. Reuters. potash) and the option value associated with its operating ratio.Institutional Equity Research Company Update January 17.6% December $30. forestry and automotive.9M $1.0x 13. Box 500. we believe the company is well positioned to take advantage of the second legup in rail volumes as North American-centric cargo.2x Stock Price Performance Source: Reuters Company Description CP is one of two Canadian Class 1 railways and has a bulk freight orientation. CIBC World Markets Inc. The diminishing risk of re-regulation in the rail industry bodes well for CP (and the railroad industry). 161 Bay Street.25 3-5-Yr.15-$0. Daily Trading Vol.7% $4. CP is our top pick given its leverage to bulk commodities (i.81E $4. Brookfield Place.. such as building materials. Investors should consider this report as only a single factor in making their investment decision. P.115 $11. firstcall.8M 168.58-$67.184. unless otherwise stated.cpr. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2011 ROE (E) LT Debt Preferred Common Equity Convertible Available Earnings Per Share While we are bullish on rails in general as a long-term investment trend.6M Shrs 661.00 $66. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. CP remains the railway with the best opportunity to improve its operating performance. Price Target CP-TSX (1/12/11) Key Indices: Toronto 12..Chiang@cibc. including potential conflicts of interest.071.e. It is targeting an operating ratio in the low 70% range within the next three to five years (from high 70%s currently). Canada M5J 2S8 (416) 594-7000 Jacob Bout. There were concerns in 2010 about increased regulatory oversight of the rail industry as shippers looked to reduce freight rates. 2010 2011 2012 P/E 2010 2011 2012 $3.20 in EPS.

15-$0.January 17.882 852 $5. except per share data Sector Outperformer Jacob Bout (416) 956-6766 jacob. Of the total mileage operated. Midwest and 1.03 Investment Thesis Focus On Cost Cutting And Improving Operating Efficiency: CP is considered the Class 1 with the most opportunity for improvement in operating ratio (it has the highest operating ratio amongst the major Class 1s). 2009A Sales Breakdown Forestry 4% Industrial Products 18% Automotive 5% Grain 27% Intermodal 29% Operating Ratios Operating Ratio Return On Equity Current Ratio Quick Ratio LT Debt/Total Capitalization Dividend Yield 2010E 77.41 2012E 5. Met Coal .1% 11% 1.15 -$1.9x 7.81 2011E 5. Deregulation Of Canadian Grain: Ability to increase “turn” – grain handlers on side.10-year agreement with Teck provides increased stability in the coal division. The company owns approximately 10.8x 9.800 miles of track. We estimate that every 1-point improvement in CP's operating ratio adds ~$0. approximately 6. Cash Flow CFPS FCFPS 2010E $3.2% 12% 1. merchandise freight and intermodal traffic.50 $49.080 4.20 in EPS.300 miles are located in Western Canada.25 $67. 45 .072 Operating Ratio Return On Invested Capital (ROIC) 16% 84% 82% 80% 78% 76% 74% 72% 70% 2010E 2011E 2012E 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 12% 8% 4% 2002 2003 2004 2005 2006 2007 2008 Source: Company reports and CIBC World Markets Inc.4x 8.S. CP is targeting an operating ratio in the low 70% range.25 12.314 1.389 8.21 1.4% 12% 0. Potash: Risk of Canpotex diversifying potash contract post-2012 (CP currently the exclusive shipper for Canpotex). DM&E: Expect EBITDA to double from $100 million to $200 million in five years.S.61 34% 1. and into Mexico.4x 2011E 15.Rail With Option Value .26 2011E $8. Key Multiples CP P/E Peer P/E CP P/CF Peer P/CF CP EV/EBITDA Peer EV/EBITDA 2010E 17.81 1.6x 10. CP-NYSE) Current Price: C$66. 2.5x 7.To 18-Month Price Target: C$78.0x 8.200 miles in Eastern Canada.S. through the U.4% 2012E 75.2 Canadian Pacific Railway Company (CP) is one of seven Class 1 North American railroads and the second largest in Canada.bout@cibc.1x 2012E 13. 2011 Canadian Pacific (CP-TSX.599 1.2x 8. 5.4% Coal Sulphur & Fertilizer 7% 10% Income Statement Sales EBITDA From Operations Earnings From Operations FD EPS From Operations 2010E 4.7x 21.9x 8.01 37% 1.4x 32.58 169 $11. from the East and West Coasts. An additional 4.ca Company Profile Share Price 52 Week High 52 Week Low Shares Outstanding (Mln) Market Capitalization ($ Bln) $66.0x 10.6x 7.80 $4.1x 14.S.92 0. Northeast.800 miles in the U.459 5. leased or operated under trackage rights.531 1.957 13. Pension: Pension expense will be headwind over the next three to four years.084 11.07 Balance Sheet Cash + ST Investments Current Assets PP&E Total Assets Current Liabilities LT Debt Total Liabilities Shareholders' Equity Q3/10 268 1.200 miles in the U. CP transports bulk commodities.619 645 $3.700 miles of track are owned jointly.3x CP’s railway feeds directly into the U.973 1.768 746 $4.73 45% 1.07 $2.16 2012E $8.00 All figures in $ millions. Agreements with other carriers extend its market reach east of Montreal in Canada.2x 7.0x 17.4% 2011E 76.

Rail With Option Value . 2011 Source: CIBC Trendspotting Matrix. 46 . Bloomberg.January 17.

8M $0.75 $8.9x Stock Price Performance AFFO Per Share 2009 2010 2011 P/AFFO 2009 2010 2011 $0.3M Nil $605.cibcwm. including potential conflicts of interest.S.ca CIBC World Markets does and seeks to do business with companies covered in its research reports.54 / 6. Our 12.Maclean@cibc. Canada M5J 2S8 (416) 594-7000 Troy MacLean. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. firstcall. Market Capitalization Distribution/Distr.7x 11. AFFO and NAV could drive Chartwell units higher in 2011.5x 2011E FFO. Reuters.000 seniors housing suites across Canada (~69%) and the U.7% December $7. where applicable.Institutional Equity Research Company Update January 17.59E $0.63E $0. Price Target CSH. CFA 1 (416) 956-3643 Troy.6M 140.ca Find CIBC research on Bloomberg.to 18-month price target is $9. Chartwell's current occupancy and income generation are below historical rates. CFA. We expect recovering occupancy (for CSH and the broader industry).3M Yes Current 3-5-Yr. and trades at an implied 7.chartwellreit. CFA (416) 956-3807 Chris.8% cap rate on current (in our view depressed) NOI.com . following credit crisis-driven pressure on the lighter-care retirement operating fundamentals over the past few years.8x 10. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Toronto. Daily Trading Vol.169. and strong growth in FFO. 2011 Stock Rating: Real Estate Sector Outperformer Sector Weighting: Chartwell Seniors Housing REIT Leverage To Recovering Occupancy.65 144.com and ResearchCentral. P.Avery@cibc. CIBC World Markets Inc.730.ca Alex Avery.O..2M Units 250. (~31%). Yield Fiscal Year Ends Net Asset Value 2011 RETURNS LT Debt Preferred Common Equity Convertible Available FFO Per Share 2009 2010 2011 P/FFO 2009 2010 2011 $0.16-$9. MRICS 1 (416) 594-8179 Alex.ca Chris Girard. www. Overweight 12-18 mo. Investors should consider this report as only a single factor in making their investment decision.7x 13. Rate 52-week Range Units Outstanding Float Avg.Sturges@cibc. See "Important Disclosures" section at the end of this report for important required disclosures. increased investor demand and declining cap rates for seniors housing property.6x.0x-13.3x 12. We rate Chartwell REIT Sector Outperformer.50 per Unit $1. Chartwell focuses primarily on the lighter-care formats of independent supportive living (57%) and assisted living (23%). Discount Valuation Present Unique Appeal $9. unless otherwise stated. well below its large-cap Canadian REIT peer average of 14. AFFO Gr.70E 11.S.ca All figures in Canadian dollars.6x 2011E AFFO.000 $1.69A $0. We expect Chartwell could achieve a recovery of as much as 200 basis points of occupancy in 2011. with the remainder nursing care.UN-TSX (1/12/11) Key Indices: None NA $6.6x Source: Reuters Company Description Chartwell Seniors Housing REIT owns and operates a large primarily retirement home focused seniors housing portfolio in both Canada and the U.Girard@cibc. Chartwell trades at 11.09 Chartwell Seniors Housing REIT owns and operates almost 24.74E 13. implying a total return of 27%. CFA 1 (416) 594-7399 Brad. Brad Sturges. Brookfield Place.61A $0.75 or 13. As a result. Box 500. 161 Bay Street.

RESOLUTION OF LEGACY STRUCTURES: The REIT has made considerable progress working through legacy partnerships.00% COMPANY DESCRIPTION Chartwell Seniors Housing REIT owns and operates a large (~24. 25. Chartwell is winding down its joint-venture and mezzanine lending relationships with Spectrum. STRATEGY Chartwell is focusing on maximizing returns from its existing portfolio.5% $0.3% Q3/09 1.0 $0.75 27% $7.756 $3.9x 2011E 11.8x 54.744 Change (8.9 $87.1% Change 50 bps -20 bps -20 bps USA.7%.2%) 2010E $0.0% Source: Company reports. fully-covered by 2011E AFFO of $0. 2011 Chartwell Seniors Housing REIT (CSH.0 $250.169. 20.1% 89. CFA Brad Sturges.0 2012 $175.ca EARNINGS SUMMARY Financial Metric Funds From Operations YoY Change Adjusted FFO YoY Change 2009A $0.5 Alex Avery.59 (14. where occupancy has eroded.0% Quebec.0 Conversion $16. 5.9 million of the 2011 convertible debentures will be redeemed in December 2010.1% n/a 15. in-fill purchases.7x 55.0% SAME-PROPERTY OCCUPANCY Segment Canadian Retirement Canadian Long-Term Care U. ThomsonOne and CIBC World Markets Inc 48 .S. 3.5X $9.8 5.2% 93.7x 2010E 12.4% Lim it 60.3% 91.Chief Operating Officer www.0% Assisted Living.2% 0. Melior and others.5 $75.1% $0.74 13. which could drive considerable growth in FFO and AFFO into 2012 and beyond.1 $124.717 $26.194 $39.7x 2011E 10.Chief Financial Officer Richard J.(1/12/2011): $8.8 $0.chartwellreit.9 $72. CFA Chris Girard.9 * $0.S. Brent Binions . in the future engaging in development activity for its own account. Quebec. 23.2% Q4 n/a 91.7% 61.18 month Price Target: $9.9% Q3/09 89.0% (52.25 Maturity May 1/12 COMPOSITION OF PORTFOLIO OF OWNED & LEASED SUITES (at Q3/10) Same-property Net Operating Income (NOI) U.1%) 2.Leverage To Recovering Occupancy.3% Long-Term Care. 26.0% CONVERTIBLE DEBENTURES (at Q3/10) Interest Rate 5. concentrating on Ontario.50 8% 8.5 LEVERAGE SUMMARY LEVERAGE SUMMARY EBITDA Interest Coverage: D/GBV (w/o convertible debt): D/GBV (with convertible debt): Q3/10 1.74 17.8%) $0.9% 88. OCCUPANCY RECOVERY POTENTIAL: A partial recovery in overall same-property occupancies (towards historical 93% range) in 2010 & 2011 is expected (mainly in Cdn retirement and the U.9% Am ount $75. Discount Valuation Present Unique Appeal .409 Q3/09 $10.8%) Level of Care Independent Supportive Living. CFA 12 .0% 90.4% 93.7% PRICE TARGET CALCULATION & NAV CIBC 2011E FFO: Target Multiple (2011E FFO): CIBC Price Target: Implied 12-18 Month Total Return: CIBC NAV(E): Premium/(Discount) To NAV: Cap Rate: TOTAL RETURN Price Return Yield Total 2008 (52.571 $25.5% Issue $14.0% Ontario.70.6% FFO MULTIPLES Chartwell Seniors Housing REIT AFFO MULTIPLES Chartwell Seniors Housing REIT 2009A 13.8 * $124.2% 2010 YTD 15.S.401 $39. VALUATION MULTIPLES REIT MANAGEMENT W. 7.1%) (0. The REIT is also considering acquisition growth in Canada moreso than in the U.2% 61.4% Q3 90. 57. INVESTMENT THESIS: SECTOR OUTPERFORMER ATTRACTIVE FULLY-COVERED YIELD: CSH yields 6.5% ) 2011E $0. CFA Troy MacLean.January 17.000 suite) primarily retirement home focused seniors housing portfolio in both Canada (accounting for ~69% of suites) and the U.3x 2009A 11. Alberta and B. and the REIT may sell retirement homes in non-core markets.UN-TSX) Stock Rating: Sector Outperformer Sector Weighting: Overweight Market Capitalization ($ mlns): $1.0 $0.4% 90.1% 93.9% (6.498 $3.3% $0.7% 97.09 Per Unit Current Yield: 6.4%) 2009 30.C.0% Geographic Location Alberta.President and CEO Vlad Volodarski .S.0% 65.6x DEBT MATURITY & LIQUIDITY PROFILE (at Q3/10) Mlns Mortgages Convertible Debentures Credit Facilities Total Weighted Avg Interest Rate: Cash & Equivalents Undrawn Credit Facilities Total 2010 $64. LTC NOI (US$) Cdn Retirement NOI (Cdn $) Cdn LTC NOI (Cdn $) Total NOI (Local $) Q3/10 $9. rather than large portfolios of properties.).0% 30. Operations Q3/10 89.1% 93. Future acquisitions are likely to be one-off. Noonan .4%) 0.69 (4.7% Q2 90.8x 2010E 13.63 3.70 18.0x-13. 39.0 $64.9% Series 2011 $115.61 (22.0 $240.0% BC. (~31%).75 Per Unit Unit Price . which should be substantially resolved in 2011.0% OCCUPANCY HISTORY (SAME-PROPERTY) Year 2010 2009 2008 Q1 90.S.2% 98.

Leverage To Recovering Occupancy. Bloomberg.January 17. 49 . Discount Valuation Present Unique Appeal . 2011 Source: CIBC Trendspotting Matrix.

which is prospective for the Nikanassin..40-$11. Our price target of $13. Potential near-term catalysts include year-end results/reserve reporting (expected in early March). We would also highlight the possibility of Daylight striking a joint venture at Elmworth (AB) to develop its natural gas resource plays. Other notable assets include its Belly River light oil play at Pembina (AB).1M Net Asset Value $12. 2010. Reuters. the average of 5.8% 7.1x target multiple to our Risked NAV (vs. S&P/TSX Income Trust Composite Projected Total Return 36. converted from a trust to a dividend-paying corporation on May 7. unless otherwise stated.cibcwm.Kaliel@cibc.95 per Shr Net Debt/CF 1.9M Distr. 10-105922 © 2010 Diana Chaw 1 (403) 216-8518 Diana. Investors should consider this report as only a single factor in making their investment decision. Toronto. P.Institutional Equity Research Company Update January 17.96A $0.ca $0.46E $1.82E 5. A&D Execution Key To Refocused Asset Base Market Weight 12-18 mo. Montney. averages of 94% and 9. In addition. Cadomin.60E 9.1x).76A $1.1x) with a 6.68 Shares Outstanding 208.240.4x Stock Price Performance Cash Dividend Per Share 2009 2010 2011 Cash-on-Cash Yield 2009 2010 2011 Company Description Daylight Energy Ltd.O.1% Fiscal Year Ends December P+P RLI (years) 11. Canada M5J 2S8 (416) 594-7000 Jeff (Sizhuo) Shen 1 (403) 221-5047 jeff.72E $0.1% Source: Reuters All figures in Canadian dollars.com . investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.0 2011 EV/DACF 6. including potential conflicts of interest. Box 500.7x 5.3M Dividend/Div Yield $0.3% 6.5X Net Debt $665.3%).6x 6.50/sh is based on a 1.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. the average of 1. Daylight trades at a P/Risked NAV of 76% and a 2011E EV/DACF multiple of 6. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Frequency $0. 2009 2010 2011 P/CF 2009 2010 2011 Current $1. Price Target DAY-TSX (1/12/11) Key Indices: $13. www.ca Find CIBC research on Bloomberg. Key assets include Daylight's Cardium tight oil at Pembina (AB) and its natural gas resource plays at Elmworth (AB). See "Important Disclosures" section at the end of this report for important required disclosures.50 $9.daylightenergy.60 / 6. 2011 Stock Rating: Oil & Gas Royalty Trusts/Dividend Corporations Sector Outperformer Sector Weighting: Daylight Energy Ltd.1% yield (vs.5x (vs. As a result. 1.0% 52-week Range $8. where applicable.81 S&P/TSX Energy Trust.7X Convertible Available Yes Cash Flow Per Share We believe shares of Daylight represent excellent value at current levels. firstcall.Chaw@cibc. and Bluesky formations.shen@cibc.ca Jeremy Kaliel 1 (403) 260-8657 Jeremy.000 Market Capitalization $2. as we believe that investors are currently paying for little or none of Daylight's significant natural gas resource potential.05 Monthly Avg.049. Daily Trading Vol. CIBC World Markets Inc. 161 Bay Street.com and ResearchCentral. Brookfield Place. we would highlight Daylight as an excellent way to play natural gas defensively.

Cadomin.4x Pengrowth Vermilion Perpetual Bonterra 2.2x 11. Operations VP. 2) Y/E P+P reserves divided by Q4 annualized production (Q4 2010E Production for 2010E).000 25.500E $0.5 1.25 150% 1 125% 100% 0.5 11. Year CF) Total Credit Facility (Current) Facility Utilized (Current) Name Anthony Lambert Steve Nielsen Ted Hanbury Brent Eshleman 2010E 2011E $283 $381 ($325) ($250) ($139) ($126) $0 $0 ($181) $5 $100 $98 $303 $305 $247 $247 $650 $651 2.87 $1.A&D Execution Key To Refocused Asset Base .16) $0.000 40.000 10.TSX) Current Price: C$9. and US$$95.0x 2011E EV/DACF 6.04 ($13.93 2011E $50.78 94% $94.9MM Market Cap.: $2. Business Services VP. 4) Basic payout ratio is calculated total dividends (excluding the effect of DRIP) paid as a % of operating cash flow.00 ($2.00 $24. Finance VP.4 44.050MM Average Trading Vol (50 day): 1.7x $625 $280 (45%) Netback Analysis ($/Boe) Gross Revenue (net trans) Hedging Gains (Losses) Royalties Operating Costs Operating Netback G&A Interest Cap Tax/Other Cash Flow Netback Group avg Operating Netback Group avg Cash Flow Netback Name Randy Ford Steve Horner Pamela Kazeil Jerry Simpson 2010E $43. and its natural gas resource plays at Elmworth (AB) which is prospective for the Nikanassin.81 12 To 18 Month Price Target: C$13. / Yield: $0.50/share is based on a 1. incl.5 Total Proved (1P) 77.00/mcf Risked NAV Price Target 2005 2006 2007 2008 2009 2010E 2005 2006 2007 2008 2009 2010E 2011E EV/DACF (2011E) 6.YOY) Reserves Growth (Per Share) 2P Reserves .5x D/CF (DAY) Drawn (DAY) (AET) Credit Line D/CF (Group) Credit Line Drawn (Group) Credit Line Draw n (DAY) (AET) Credit Line Draw n (Group) Price to Risked NAV 97% 93% 94% 94% 101% 104%105% 83% Total Pay out Ratio Inflow s v s.000 5.000 Sector Outperformer Jeremy Kaliel.75 $1. Montney.052A 40. Key Assets: Key assets include Daylight's Cardium tight oil at Pembina (AB).000 30.ca Diana Chaw (403-216-8518) Diana.0 FD&A . (DAY .0 91.5x 0 0. Relative Valuation: Daylight is currently trading at a Price to Risked NAV ratio of 76% and a 2011E EV/DACF multiple of 6.000 0 2007A 2008A 2009A 2010E 2011E 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% 135 120 105 90 75 60 45 30 15 0 2005A (% change .6 / mthly / 6.4x11. In addition we would highlight Daylight as excellent way to play natural gas defensively.75) $29. Our 12-18 month price target of $13.68 Current Price PetroBakken Bonavista Vermilion Crescent Point Baytex Penn West CIBC Base Cmdty Prices US$50/bbl C$4.5x 1 1.1x 8.33A 42.13) ($10. Coverage Group (CIBC Estimates) Share Price $9.5x 7.3%).3 Proved + Probable (2P) 119. with FX of $4.1x.760A $0.00/bbl (2012E). incl.0x 10.1% Shares O/S(1): $208.000 20.25 25% 0 0% 200% 175% 150% 125% 100% 75% 50% 25% DAY Group 5 $45 $40 $35 $30 DAY Risked NAV (C$/Share) "Bluesky" NAV (unrisked) Risked NAV Core NAV 71% 87% 88% % Credit Facility Utilized % Credit Facility Utilized Total Debt Cash Flow Total Debt / /Cash Flow Crescent Point Progress Penn West PetroBakken Bonavista Perpetual Enerplus Group Group Avg.50 USD/Cdn (longterm). 3) Year operating netbacks divided by reported P+P FD&A cost.00 $18.ca SUMMARY & INVESTMENT THESIS Investment Thesis: We have a Sector Outperformer rating on Daylight Energy Ltd.95/share (less forecast dividends of $0.1x. Source: Company reports and CIBC World Markets Ltd.00/mcf Key Valuation Metrics vs. We would also highlight the possibility of Daylight striking a joint venture at Elmworth (AB) to develop is natural gas resource plays.46E $1.82E 42.1% 5.Kaliel@cibc.5 175% 1.93 Daylight Group Average MANAGEMENT (Ownership: 3.273A $0.5 50% 0. 5) Our base commodity price assumptions are US$$85.000 15.60/share) versus the group average of 1.230.50 Dividend (NTM) / Freq. C$$0. and inflows versus outflows is calculated as total CAPEX and dividends (including the effect of DRIP) as a % of operating cash flow.8x 8.000 35.YOY) (Mmboe) (boe/d) 2006A 2007A 2008A Q1 Q2 Q3 Q4 FY % Gas Production (Boe/d) CFPS (Basic) 2010E 2010E 2011E 2011E 39. FDC on a cash basis. MBA (403-260-8657) Jeremy. Avg.97/mcf (2011E).0x 2 2.Years 8.5x 2.0x 0. and C$$0. AET DAY Group 2011E DAY Group DAY Group DAY Group DAY Group DAY Group DAY Group DAY Group DAY Group DAY Group DAY Group $20 $15 $10 $5 $0 US$100/bbl C$7.7x 8.1%) Position President & CEO VP.38A 42.16) $0.5x (versus the group averages of 94% and 9. Production NOTES 1) Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues). 2011 Daylight Energy Ltd. We believe shares of Daylight represent excellent value at current levels. as we believe that investors are currently paying for little or none of Daylight's significant natural gas resource potential.59 $32. with a 12-18 month price target of $13. C$0.85 $30.37A $0.0x 1.174 $22.2x Reserve Engineers: GLJ Petroleum Consultants Ltd.1% (versus the group average of 5.38E 41. Potential Catalysts: Potential near term catalysts include year-end results/reserve reporting (expected in early March). and Bluesky formations.January 17. and $$5.3x 1.150E $1.4x 8.00) ($2. US$$90.2P.44) $23.4x 6. $$4.09 3 Cash Recycle Ratio 1.1x P/Core NAV 158% 181% EV/ EV/2P P/Risked Production Reserves NAV ($/Boe/d) ($/Boe) 76% $64.83 ($12.2x Financial Flexibility ($MM) Cash Flow from Operations 6 Capital Spending Dividends DRIP Surplus (Deficit) Working Capital Deficit Bank Debt Senior Notes/Other Debt Net Debt at Year-end Debt / CF (Y/E Debt. Inflows4 200% 1. 51 Pengrowth Progress Daylight Enerplus Average Trilogy Peyto ARC NAL Bonterra Trilogy Peyto ARC NAL $25 .0x 8.5 0.3% 2011E P/CF 5.97/mcf (long term) for AECO natural gas.00/bbl (2011E).MMboe (DAY) RPS Growth (DAY) RPS Growth (Avg) RELATIVE RISK & MAGNITUDE OF UNBOOKED PROSPECTS 30% 25% 20% 15% 10% 5% 0% -5% -10% (% change .0x 3 3.5x 9.17) ($9.Chaw@cibc.Shen@cibc.9x 9.1 162.1x 9.5 PDP % of Total Proved 56% 49% Total Proved % of P+P 65% 56% 2 2P Reserve Life . Exploitation Position VP. FDC $26. Reserves (MMBoe) Proved Developed Producing 43.20 $27. total payout is calculated as total CAPEX and dividends (excluding the effect of DRIP) as a % of operating cash flow. 6) Based on net capex including the effect of Alberta royalty credits.1x target multiple to our Risked NAV of $12. Outflow s (incl DRIP) Basic Pay out Ratio 112% 108% 108%108% 76% 77% Daylight Baytex Average 12. INFLOWS D/CFDebt Metrics (DAY) D/CF (Group) VALUATION SUMMARY Outflows vs.25) ($2.450E 57% 51% 5 2009A +Net Acq.00/bbl (long term) for WTI crude oil.ca Jeff Shen (403-221-5047) Jeff.1x 9.1x 10. 2009A DEBT & OUTFLOWS VS.5 3.81 Expected Return 44% 21% 2011E Yield 6.5x 8.97/mcf (2012E). PROPERTY OVERVIEW PRODUCTION & RESERVES GROWTH Production Growth (Per Share) Production (DAY) PPS Growth (DAY) PPS Growth (Avg) 45.3x 9. Other notable assets include its and Belly River light oil play at Pembina (AB).50/share.75 75% 0. respectively) while providing a current yield of 6.37 $25.0x Payout Ratios 4. CFO Executive VP VP.231 $16.01 ($2.85 USD/Cdn (2012E).35 USD/Cdn (2011E).

January 17. Bloomberg. 2011 Source: CIBC Trendspotting Matrix.A&D Execution Key To Refocused Asset Base . 52 .

we believe it is a good time to buy EnCana.2x 34. Box 500.2x Source: Reuters All figures in US dollars. EPS Gr.com . Over the long term. but given the still relatively weak outlook for natural gas in 2011 we expect growth to be more in the 7% range -. 2) a growth strategy that balances capex and cash flow.Lupick@cibc. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.933.21E $5. Reuters. See "Important Disclosures" section at the end of this report for important required disclosures.624 $21. For EnCana to outperform.7% December $38.1x Stock Price Performance Cash Flow per Share 2009 2010 2011 P/CF 2009 2010 2011 Company Description EnCana is a leading North American natural gas producer.8x 5.6M $0.0M No Current 3-5-Yr.64 EnCana was a big laggard in 2010 as weak gas fundamentals more than trumped the company's strong production growth. Brookfield Place.62A $0. CIBC World Markets Inc. Market Weight 12-18 mo. including potential conflicts of interest. Daily Trading Vol.cibcwm. www.87E 6.0M Nil $16.4x 2011E EV/DACF.ca Find CIBC research on Bloomberg. Price Target ECA-NYSE (1/12/11) Key Indices: Toronto.00 $29. Nick Lupick 1 (403) 221-5049 Nick. peers. 3) a recovery in natural gas prices.Large Cap Sector Outperformer Sector Weighting: EnCana Corporation JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011 $36.S. 2011 Stock Rating: Oil & Gas .encana. ECA trades at only 77% of our risked NAV estimate and at 6..63 740.4x 30. NYSE NM $26.064. and/or. Toronto.ca $9.com Andrew Potter. Rate (E) 52-week Range Shares Outstanding Float Avg.still at the high end of Canadian comparables' growth rates and in line with U. We believe all of these events are likely. a significant discount to its peers.885. unless otherwise stated.41 per Shr 4. As a result.98E $0. Canada M5J 2S8 (416) 594-7000 Kyle Balaux 1 (403) 216-3401 Kyle.2x 4.02-$35. Market Capitalization Dividend/Div Yield Fiscal Year Ends Net Asset Value 2011 ROE (E) Net Debt Preferred Common Equity Convertible Available Earnings per Share 2009 2010 2011 P/E 2009 2010 2011 $4.com and ResearchCentral. Investors should consider this report as only a single factor in making their investment decision. As the market regains confidence in ECA's strategy/asset quality. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.67E 3.0M Shrs 2.0% $7. Given the weak performance in 2010 and the stock's near-record-low valuation.80 / 2.Institutional Equity Research Company Update January 17. we need to see some combination of: 1) EnCana landing a large joint venture (reduces capex burden and depicts value). we believe EnCana has the capability to grow 10%+ per year. firstcall.O. CFA 1 (403) 221-5700 Andrew. where applicable.844.ca CIBC World Markets does and seeks to do business with companies covered in its research reports.Balaux@cibc.29A $6.0M 735. P.Potter@cibc. we believe there is substantial room for the valuation to re-rate to historical levels. 161 Bay Street.

67 $0.604 $3.282 Total Risked NAVPS .928 Total Unrisked NAVPS .926 $6.428 $824 $36 ($49) ($3.7x 0.332 2.9x 0.010 28.41 P/NAVPS (Risked) 77% 94% Target P/NAVPS (Risked) Total Unrisked Asset Value $51.172 13.386 ($341) $332 $6.338 $4.50 US$9.3x 6.842 9.Potter@cibc.386 15.237 $7.178 $5.% Free Cash Flow Debt Analysis Net Debt .00 $94.56 $6.07 $74.878 732 95% 0% 11% 2013E $3.50 US$9.5x 14.172 10.2x 31.621 0 29.97 2011E 1.ca Nick Lupick.122 $0 $42 ($3) ($537) $0 $7.0x 20.25 $4.02 $75.671 25.0x 0.614 $3.3x 2013E US$95.00 $0.$M Net Debt .2x 2012E 5.97 2012E 1.00 $5.99 US$9.00 $0.317 29.67 $637 $0.1x 14.98 $5.303 2015E $5.30 US$4.42 $58.97 2015E 2.2x 2009 6.$mm Net Debt/Cash Flow Net Debt/EV Valuation EV / DACF Target EV / DACF P/EPS Target P / EPS Source: Company reports and CIBC World Markets Inc.ca 2010E $29.29 $3.067 84% $966 2013E $6.070 $4.2x 2015E 3.479 1.5x 41.22 US$6.720 11.746 $0 $42 ($3) ($481) $0 $6.855 1.358 $6.000 10.$mm Enterprise Value . NYD) Current Price: $29.80 / 2.62 $5.22 US$6.61 US$3.93 $1.838 0 23.727 $4.983 686 84% 4% 2010E US$79.50 US$9.4x 2014E US$95.00 Target Return: 21.35 US$9.300 0 25.300 590 96% 0% 7% 2011E $1.408 1.55 $67.405 735 2.360 $10.January 17.21 $725 $0.617 $2.US$mm (except per share values) Canada EBITDA US Net EBITDA Integrated EBITDA Marketing EBITDA Other & International EBITDA Corporate & Other EBITDA Hedging (Forecasted) Total EBITDA Total Company Operating Cash Flow CFPS (Diluted) Operating Income Operating EPS (Diluted) Net Capex Net Capex/Cash Flow .3x 0.736 $2.767 0 38.5% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .2009 Total Risked Asset Value $28.624 $0.00 $5.87 $4.1x 15.337 11.2x 2013E 4. CFA Ph: (403) 221-5700 E-mail: Andrew.45 $6.MBoe/d Natural Gas % Oil Sands % Production Growth Per Share .479 $28.64 740 $21.093) $0 $6.7x 54 .8x 0.6x 2012E US$90.805 $2.99 US$8.098 113% ($589) 2010E $6.97 2013E 1.541 0 33.4x 0.882 $2.bbl/d United States Oil & Liquids Production .805 0 41.94 $3.00 $0.00 $94.100 $6.20 $5.945 107.02 $75.959 $2.0x 16.163 13.9% $38.02 $75.0x 14.bbl/d SAGD Oil & Liquids Production .64 Price Target: $36.187 22.064 1.3x 36.4x 7.7x 4.090 $1.00 $94.53 P/NAVPS (Unrisked) 42% Target P/NAVPS (UnRisked) 51% 2009 US$61.729 $5.183 $4.321 0.793 659 95% 0% 12% 2012E $2.471 66.9% $70.678 5.2x 2011E 6.159 100% $18 2011E $7.bbl/d Oil & Liquids (bbl/d) Production .00 $1.23 $0.909 $6.6x 12.7x 24.2x 35.288 1.37 $3.5x 5.12 $69.ca Net Asset Valuation .978 3.4x 7.033 $8.26 $1.194 2.060 3.438 78% $1.97 2014E 2.436 $0 $42 ($3) ($576) $0 $8.319 1.7% Kyle Balaux.713 2.% Financial Statistics .88 2009 1.8x 0.057 82% $1.509 $6. Ph: (403) 221-5049 E-mail: Nick.51 $77.7x 2015E US$95.464 $0 $42 ($3) ($403) $668 $4. Ph: (403) 216-3401 E-mail: Kyle.264 92% $555 2014E $6.459 $4.607 0.2x 2014E 4.mmcf/d Natural Gas (MMcf/d) Canadian Oil & Liquids Production (excluding FC & CL) .JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011 .19 $1.921 12.1x 2009 $4.97 2010E 1.00 $84. Sector Outperformer Analyst: Andrew Potter.22 US$6.40 US$4.774 19.948 2.768 $0 $25 $1.239 4.99 $66.00 $89.2x 12.00 $5.695 $6.00 $0.616 3.611 90% $489 2012E $6.844.688 817 95% 0% 12% 2014E $4.00 $0.820 $9.854 3.968 877 95% 0% 7% 2015E $4.0x 4.Lupick@cibc.313 0.477 4.927 $0 $42 ($3) ($434) $461 $5.1x 4.75 $4.$M Float .013 $2.546 2009 $5.680 552 96% 0% 2011E US$85.2x 2010E 6.48 $4.85 US$9. 2011 Encana (ECA-TSX.665 1.9x 2010E $2.6x 6.23 US$5.mm Average Trading Volume (50 Day) Annual Dividend / Yield Note: All company figures are in USD unless stated otherwise CIBC Deck NYMEX WTI (US$/Bbl) Edmonton Par (C$/Bbl) Western Canadian Select (C$/Bbl) NYMEX Gas (US$/Mcf) AECO (C$/Mcf) CRCK321 (US$/Bbl) FX (US$/C$) Operating Statistics Canadian Natural Gas Production -mmcf/d United States Natural Gas Production .984 $9.Balaux@cibc.

2011 Source: CIBC Trendspotting Matrix. 55 .January 17.JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011 . Bloomberg.

firstcall. CIBC World Markets Inc. Jean Coutu remains a relatively inexpensive. paying reasonable prices. 2011 Stock Rating: Merchandising Sector Outperformer Sector Weighting: Jean Coutu Group (PJC) Inc.S.4M 111.. Daily Trading Vol.3x 12. Earnings will be not much more than flat this year.2x Stock Price Performance Source: Reuters Company Description Jean Coutu is the largest drug retailer in Quebec and owns a 28. and possibly a few Quebec deals as pharmacy economics make size and scale more critical attributes.76E $0. Toronto.70A $0.cibcwm. one of the largest pharmacy chains in the U. the strong position of Pro Doc and the company's potential to add stores in Quebec as independents further place Jean Coutu at the top of our radar screen.76E 13. Price Target PJC. and Quebec drug reforms will drag a bit on growth in the following year. Canada M5J 2S8 (416) 594-7000 Eric Balshin 1 (416) 956-6108 Eric. unless otherwise stated. CFA 1 (416) 956-3278 Mark.170. As a result. $0. Low Price. where applicable.800 $2.8M Nil $558.A-TSX (1/12/11) Key Indices: None NM $7.50 $9. EPS Gr. its narrow focus and its good franchisee relations might make Coutu a welcome addition to the national scene. We would be surprised if PJC was not an active participant.39 per Shr 31. Reuters. However. well-positioned drugstore chain with numerous opportunities for growth. Good Position Market Weight 12-18 mo. Box 500. P. including potential conflicts of interest. www. 161 Bay Street.com and ResearchCentral.1M Shrs 425. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.4% February $2. Rate (E) 52-week Range Shares Outstanding Float Avg.2x 12.1M No Current $11. Mark Petrie.Balshin@cibc.ca All figures in Canadian dollars.ca Find CIBC research on Bloomberg.30 3-5-Yr.Petrie@cibc. Investors should consider this report as only a single factor in making their investment decision. Over the next 12 months.9% $219. Jean Coutu is also well positioned to participate in national drugstore consolidation. 2010 2011 2012 P/E 2010 2011 2012 Excludes Rite Aid. See "Important Disclosures" section at the end of this report for important required disclosures.Institutional Equity Research Company Update January 17. its strong buying practices.O. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2011 ROE (E) Net Debt Preferred Common Equity Convertible Available Earnings Per Share Despite its earnings forecasts being significantly impacted by recent Quebec drug reforms. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.22 / 2.com Perry Caicco 1 (416) 594-7279 Perry.ca CIBC World Markets does and seeks to do business with companies covered in its research reports.24 233.88-$10. Its expertise in front-store merchandising.Caicco@cibc.jeancoutu.4% equity stake in Rite Aid. we expect at least one sizeable national transaction.com .6M $0. Brookfield Place.

490.4 19. PJC is well-positioned to make sizable acquisitions outside of Quebec.583.7 2.30 0.30 12.0x 13.0 0.30 $ 0.4 636.9 511.85% 4.8 2.a share price.1 3.8% 4.2 0.08 8.112 7.6 219.765.3 PJC is the dominant drugstore chain in Quebec.6% 6.5x 8.9 7.2% $2.6 2.19% 248.6x 13x 11x 9x 7x 5x Rite Aid share price.5x 8.337.4% 23.0 0.5% 1.08 12.014 1.8 2.3 -0.591.14% 19.26% 7.014 1.6 75.8% 15.3 20.ca Mark Petrie.3% 2.6) $ 2.6x -0.9 277.9 13.1 62.543.66) 11.0 $ $ $ $ $ CAD 2.95% 59.58% 17. 2011 Jean Coutu Group Inc.3 2.4 341.4 3. CAD PJC Canada EBITDA estimate PJC Canada EV/EBITDA $20 Current EV/Next 12m EBITDA 7.7% -1.8 7. Diluted $ 473.7% 0. Network Operations Performance Summary Anuual Review F2010 F2011e F2012e Same-Store Sales Growth Prescriptions Front-Store Total Square Footage Growth Total Prescriptions Front-store Total Retail Sales Distribution Sales (Inc.892 9.08 $ 8.1 $ 2.4 123.0 $ 246.76 $ 233.2 7. PJC PJC.1 13.9% 2.2 7.8% 1. CAD RAD current share price.2 1.61% 7.7 268.7 62.05% 3.21 $ 233.2 13.22 $ 227.2 Price/Share Rite Aid stake Sub-Total Net (Debt) Cash Total Pre-Tax Realizable Value Note: Conversion to CAD$ at Current Spot Rate of: $ 0.4 111. New Store Development F2010 F2011e F2012e Total Store Count Estimated Sq.01 (0.647 6.5 13.495.0 0.2 $ 2.1 62.0 5.0% 0.15 398 2.5 8.9 13.34 Market Information Shares Outstanding Float Market Capitalization Net Debt Enterprise Value $ 233. Ft.01% 217.5x 14.30% 3.7 244.2 149. 57 Forward EV/EBITDA $15 .5x 17.4 7.6 -4.4% 0.8 6.5 173.6 74.9 953. Pro Doc) Other Revenue Total Revenue 6.0 0.1 945.98% 3.1 277.7x 9.3% 1.3% Valuation .4 244.3% 16.7% 2.Caicco@cibc.5% 22.41% 14.53% 57.7 254. Y/Y Sq.05% 4.370.7x 0.6 1.6 343.9 13.14% 14.6 923.592.3x 14.298.7 F2012e 26.6x 15.2 $ 131.F2012E NAV Q3/F11 Review Actual Estimate Q3/F10 CDN Operations $ EBITDA F2012E 277.7x 7.2 Share price 4.8% 579.9 165. Over the next few months.1 8.4x 8.5x 0. Finance and Corp.4x 12.2 74.0 48.395.3 2.ca Investment Thesis Comparable Analysis LY P/E ratio Jean Coutu (ex .355.5 7.025.7 3.Petrie@cibc.6 285.0 0.4 F2011e 31.2 616.282.2 0.0 $ 269.4 Management Jean Coutu Francois J.170.3 6.27 424 3.5 614.5 66.2% 0. RAD Loss # of Shares O/S. Affairs EVP.2 5.0 678.Low Price. Longer-term.7x 26. RAD) Shoppers US peers 8.7x 8.7% 20.76 228.1 9.22 228.9 179.Balshin@cibc.4 0.97% 12.880.16 $160. (PJC.6 2.22% 7.99 $ 1.6 677. and owns a growing generic drug manufacturing business.4 $ 7.3 7.9 0.3 47.19 236.4 128.74% PJC Canada price per share.8 0.1 1.0 177.0 0.390.3 8.9% $3.January 17.0% -3.389.36 USD/CAD Coutu Calculator Next 12m PJC/A current share price.ca Eric Balshin (416-956-6108) Eric.9x 0.2x 12.014 1.637.1 5.6 6. in CAD EV/ Next 12m EBITDA. drug reimbursement policies in Quebec will trim the company's earnings.8% 6.70 $ 236.01 $155. USD Current USD/CAD exchange rate Value of RAD per PJC share.7 18.5% $2.50 All figures in millions except per share data Sector Outperformer Perry Caicco (416-594-7279) Perry. Bloomberg and CIBC World Markets Inc.49 $157.0x 8.053.6 $ 1.741.A-TSX) Current Price: C$9. in CAD F2012E 9.1 $ 2.8% 611.4 -55.7 6.2x 14.0% 0.99 1.3x Gross Margin % of Sales SG&A Expenses % of Sales Amort of Fran Incentives EBITDA % of Sales D&A Interest Expense Tax Expense Net Earnings Loss From Rite Aid EPS Excl.9% 17.1% -3.38% 55.To 18-Month Price Target: C$11. CAD $ $ $ $ $ $ $ 9.1% 3.7x 28.5% 6. CAD PJC shares o/s Net Debt (Cash) PJC Canada EV.2 502.338.99 Value/Share CAD 10.RAD) Shoppers US peers EV/EBITDA Jean Coutu (ex. Coutu Andrew Belzile Alain Lafortune Normand Messier Chairman President and CEO EVP.33% 231.9 699.8 76.8% 597.0x $ # of Shares 252. Purchasing and Marketing EVP. CFA (416-956-3278) Mark.2 $ (149.6% 2.8 $ 2.3x 14.1 5.2 71.93 Multiple Value 9. Ft Increase Avg Store Size (Thousands) 370 2. but the impact is one-time.0% 1. Good Position .2% 2. Drug reform in Quebec continually weakens independents and puts PJC into a stronger position for acquisitions.2 0.9x Key Ratios TY NY ROE ROA After-Tax ROIC Current Ratio Net Debt/EBITDA Net Debt/Capital BV/Share FCF F2010 34.4x 7.7 3.6% 1.39% 17.6 $10 $5 $- Source: Company reports.20 $ 233.2 1.5 43.6x 12.4 348.

2011 Source: CIBC TrendSpotting Matrix.January 17.Low Price. 58 . Bloomberg. Good Position .

2M 67.8x 9..ca Khaled Sultan 1 (416) 594-7297 Khaled. Rebuilding In A Classic High-grade Camp Overweight 12-18 mo.Cooper@cibc. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.1x 13. 2011 Stock Rating: Precious Metals Sector Outperformer Sector Weighting: Kirkland Lake Gold Inc. As a result.53A $1.003. Rate (E) 52-week Range Shares Outstanding Float Avg. www.0M Shrs 260.cibcwm. P. Drilling continues to intersect mineralization that is among the highest concentrations in the world. with the added prospect of finding high-grade mineralization where the hit ratio has been >80%.19 68. With two sources of ore. 161 Bay Street.21A) $0.00 $14. EPS Gr. We foresee prospects for expansion beyond these figures and delivery of production will be the key driver for share price performance. Toronto. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2010 ROE (E) LT Debt Preferred Common Equity Convertible Available Earnings per Share Kirkland Lake is re-developing the Macassa mine in Kirkland Lake into a better operation than when it ran for 65 years in the mid to late 1900s.klgold. which should vault KGI into intermediate producer status. We think KGI trades at attractive multiples relative to its upside potential for growth in production as well as reserves.10E Current $22. Reuters. the build-out of production won't be constrained by ore availability. Box 500. including potential conflicts of interest. The company's flagship mine is the Macassa Mine located in Kirkland Lake.000 oz. Brookfield Place. Ontario. CIBC World Markets Inc. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.com . where applicable. Canada M5J 2S8 (416) 594-7000 Barry Cooper 1 (416) 956-6787 Barry.53E NM 27.25-$16. is an operating gold mining company located in Canada.34 per Shr NM NA Nil $159.Institutional Equity Research Company Update January 17.4x Stock Price Performance Cash Flow per Share 2010 2011 2012 P/CF 2010 2011 2012 ($0. Production plans remain on track for growth to the 200.30A) $0. including the high-grade South Mine Complex. annual level within two years.4M No ($0. Price Target KGI-TSX (1/12/11) Key Indices: None NM $6.com All figures in Canadian dollars. Long-term prospects for continued reserve growth are strong. 2010 2011 2012 P/E 2010 2011 2012 NM 49. Investors should consider this report as only a single factor in making their investment decision.72 3-5-Yr. CIBC World Markets does and seeks to do business with companies covered in its research reports. See "Important Disclosures" section at the end of this report for important required disclosures.000 $1.6M Nil / Nil April $2. The company's shares offer good leverage to gold price movements. unless otherwise stated. firstcall. with results that are reminiscent of the Red Lake mine. given KGI's control of most of the key ground where it operates.O.Sultan@cibc.6x Source: Reuters Company Description Kirkland Lake Gold Inc.com and ResearchCentral. Daily Trading Vol.30E $1.ca Find CIBC research on Bloomberg.

5 x mineralization that is among the highest concentrations in the world.3 x 49. 60 .2 x 1.2 x 49.397 2.5 x 2.200 Ownership Discount Rate US$ Millions 43 Per Share 0.2 x 3.21 63 $1.000 $800 $600 $400 $200 $0 Production Production (2011E)/Resource Detail Asset Macassa and SMC Total * Gold (000s oz) ** Net of by product credits (if applicable) NAV Breakdown .6 x 2.5 x 2.64 2. 2011 CAD 14.1 x in a few years. P/NAV Sensitivity Avg.05 9.G&A Exploration Total Expenses Income Before Tax Income Taxes Net Income EPS CFPS Shares Outstanding P/NAV $1.403 $8.0 x 3.Rebuilding In A Classic High-grade Camp .6 x 33.9 x than when it operated for 65 years in the mid to late 1900s.5 x 2.700 185 $625 $32 $332 122 20 5 6 153 178 60 118 1.300 3.8 x 18.2 x 27.916 $9.6 x 20. The company continues to intersect gold Small Cap Average (<$2B) 1.2M oz * Proven & Probable Reserves Income Statement Gold Price Assumptions US$ Production (000s ounces) Cash Costs US$/oz Capital Expenditures Revenues Expenses Operating Expenses D.00 0.2-1 M oz 1.2M oz EV Statistics .2 x 4.0 x 28.5 x 1. With two major source areas for gold. A low float in shares makes it particularly vulnerable to high volatility for good news flow which we expect will be coming as ** Using: US$1200/oz @ Risk Adjusted Discount Rates plans and actions take place.3 x 2.4 x 1.5 x 2. Gold price assumption in yr 2010 @ US$1225.2 x EV/2P* $683 $834 $495 $652 $882 $525 $557 $1.0 x 9.3 x 1.79 Source: Company reports and CIBC World Markets Inc.0 x 21.300 1.8 x 19.7 x 2.6 x 2.8 x prospects for grade enhancement at the mine.7 x 14. unless otherwise stated.Sultan@cibc. Reclamation S.4 x 2.269 2P: Modeled Proven & Probable Reserves (000s oz) M & I: Modeled Measured + Indicated Resources (000s oz 1.9 x 3.30 0.9 x the added prospect of finding high-grade mineralization. The high-grade nature of the new South Mine Complex offers up some interesting Mid Cap Average ($2B-$10B) 1. 2011 Kirkland Lake Gold KGI-TSX Date Share Price Rating Target January 12.2-1 M oz Small Producers < 0.100 $1. We believe that as production is Large Cap Average > 1M oz 1.0 x 1. We believe that its operations have a higher* Cash Adjusted NAV Multiples Using: US$1200/oz Gold Pricing And 5% Discount Rates than-normal degree of delivery on forecast projections made by the company.7 x 16.9 x build-out of production will not be constrained by stope availability once the expansions are complete Large Cap Average (>$10B) 1.US$ Kirkland Lake North American Average Large Cap Average (>$10B) Mid Cap Average ($2B-$10B) Small Cap Average (<$2B) Large Cap Average > 1M oz Intermediate Producers 0.5 x 1.9 x 2.134 $34 $52 57 4 3 5 68 -17 0 -17 -0.3 x 24.0 x 1.US$ Kirkland Lake North American Average Large Cap Average (>$10B) Mid Cap Average ($2B-$10B) Small Cap Average (<$2B) Large Cap Average > 1M oz Intermediate Producers 0. yr 2011@ US$1600.5 x 2.9 x 5% Discount P/NAV P/NAV $1.8 x 2.ca All figures in C$ million.400 $1.6 x 2.4 x NEG 26.1 (416) 594-7297 .4 x 2.4 x 2.ca Khaled Sultan .9 x 17.21 68 Production* Cash Costs** 2P M&I 146 631 1.53 68 F2012E $1.3 x 3.8 x 172.200 $1.47 0.2 x 1.344 $9. and yr 2012 @ US$1700 Risk adjusted discount rates vary from 8% to 15% depending on the location of the asset and its technical challenges Multiples P/NAV* P/NAV** 2010 PE 2011 PE 2010 PCF 2011 PCF Investment Thesis KGI is re-developing the Macassa mine in Kirkland Lake into an operation that will likely be better Kirkland Lake 1.Barry.6 x 4.72 Sector Outperformer CAD 22.1 x Risk Adjusted Discount P/NAV P/NAV P/NAV $1.7 x 16. Barry Cooper .7 x 2.2 x 37.0 x 1.2 x 2.63 100% 100% 5% 577 50 671 8.2-1 M oz Small Producers < 0.7 x 1.6 x 19.600 146 $647 $32 $246 99 16 4 6 125 121 40 80 1.0 x 2. Gold Px .9 x 2.5 x 15.4 x 22.00 Source: Company reports and CIBC World Markets Inc.10 1.5 x Red Lake where market multiples are high.3 x realized the market will recognize that this camp is worthy of similar multiples afforded operations in Intermediate Producers 0.5 x 73.6 x 13.016 $9.541 $9.269 146 $631 1.30 -0.Cooper@cibc.9 x 1.9 x 2.0 x 48.000 $1.0 x 3.4 x 2.8 x 109.225 93 $720 $58 $121 71 8 3 6 87 34 11 23 0.742 $8.05 0.9 x 2.085 ** Reserves and Resources F2010A $975 45 $1.8 x 15.100 $1.000 2.9 x 501.2M oz 2.83 0 3 3 667 0.8 x NEG 54.4 x 1.397 2.73 9.7 x 18.4 x 2.8 x 3.203 $5.D&A.7 x 38.Khaled.US$ Gold Price of: Current Assets Cash Mining Assets Macassa and SMC Kirkland Lake Land Total Assets Liabilities LT Debt Reclamation Total Liabilities Net Asset Value Asset Locations Total Cash Costs F2011E $1.53 68 F2013E $1. KGI offers good leverage to gold price movements with Small Producers < 0.221 EV/R&R** $400 $491 $360 $349 $524 $296 $348 $277 Production Profile Production 000s Ounces 250 200 150 100 50 0 F2010E F2011E F2012E F2013E F2014E F2015E EV ($mln) EV/Prod $953 $6.7 x 26.9 x 1.4 x 2.6 x 1.January 17. the North American Average 1.4 x 2.7 x 39.3 x 2.1 (416) 956-6787 .0 x 1.2 x 40.8 x 1.

January 17. 61 .Rebuilding In A Classic High-grade Camp . Bloomberg. 2011 Source: CIBC Trendspotting Matrix.

1x Stock Price Performance Cash Distribution Per Unit 2009 2010 2011 Cash-on-Cash Yield 2009 2010 2011 $1. attractive Cardium acreage. We believe NAL's track record of operational execution bodes well for the upcoming update.00 $13. As a result.9M Net Asset Value $15.3%). Daily Trading Vol. Potential near-term catalysts include 2011 guidance and an operational update (expected January 25.3% 6.08E $0.5X Convertible Available Yes Cash Flow Per Unit With a 6.3% 52-week Range $9.6% 8. the average of 122%) and a 2011E D/CF ratio of 1. 450.nal.5% Fiscal Year Ends December P+P RLI (years) 11. Frequency $0.1x). www. Toronto.O.95 Shares Outstanding 146. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.04 per Shr Net Debt/CF 1. Box 500.6M Distr.84 / 6.5% yield (vs. firstcall.ca Jeremy Kaliel 1 (403) 260-8657 Jeremy. averages of 94% and 9. Brookfield Place.5% yield (vs. 161 Bay Street.Institutional Equity Research Company Update January 17. 2011 Stock Rating: Oil & Gas Royalty Trusts/Dividend Corporations Sector Outperformer Sector Weighting: NAL Energy Corporation Cardium First Mover Our Top Higher-yielding Pick Market Weight 12-18 mo. NAL is our top pick for yield-focused investors.0x (vs. 2009 2010 2011 P/CF 2009 2010 2011 Current $2.7M Dividend/Div Yield $0. 10-105922 © 2010 Diana Chaw 1 (403) 216-8518 Diana.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. Our price target of $16.00/sh is based on a 1. See "Important Disclosures" section at the end of this report for important required disclosures.com . P.0x 6.com and ResearchCentral. and its Doig gas play (northeast BC).12A $1.ca Find CIBC research on Bloomberg.07 Monthly Avg.3%).1x 7. unless otherwise stated.9x).000 Market Capitalization $1.1x) with a 6. Key assets include NAL's Cardium tight oil at Garrington & Cochrane (southern AB) and its conventional Mississippian light oil play (southeast SK).0 2011 EV/DACF 7. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Canada M5J 2S8 (416) 594-7000 Jeff (Sizhuo) Shen 1 (403) 221-5047 jeff.Kaliel@cibc. after mkt. and a strong balance sheet.908.). the average of 1. 2010. NAL trades at discounted P/Risked NAV of 87% and a 2011E EV/DACF multiple of 7.15A $1.).shen@cibc.15E 6.ca All figures in Canadian dollars.Chaw@cibc.1x target multiple to our Risked NAV (vs. the average of 5.87E $2. Price Target NAE-TSX (1/12/11) Key Indices: $16. its Wabamun oil asset (AB).68-$14. as well as year-end results/reserve reporting (expected March 9. S&P/TSX Income Trust Composite Projected Total Return 29. CIBC World Markets Inc.. Investors should consider this report as only a single factor in making their investment decision. including potential conflicts of interest.5% Source: Reuters Company Description NAL Energy Corporation converted from a trust to a dividend-paying corporation on December 31. Other notable assets include its Viking light oil play at Provost/Irricana (AB).cibcwm.0X Net Debt $496.5x (vs. after mkt. Reuters.02 S&P/TSX Energy Trust. the average of 1. Supporting its yield is a total payout ratio of 107% (vs. the average of 5. where applicable.84E 8.

5 2.: $1.000 30. 2) Y/E P+P reserves divided by Q4 annualized production (Q4 2010E Production for 2010E).).0x 9.611 $23. Year CF) Total Credit Facility (Current) Facility Utilized (Current) Name Andrew B.Years 11. Our 12-18 month price target of $16. 3) Year operating netbacks divided by reported P+P FD&A cost. NAL is our top pick for yield focused investors. With a 7% yield (vs.5x 0 0.25 $1. MBA (403-260-8657) Jeremy. and $$5. respectively) while providing a current yield of 6.Cardium First Mover Our Top Higher-yielding Pick .5 1. Source: Company reports and CIBC World Markets Ltd.7x 8.48E 30.5x 8.Kaliel@cibc.000 10. Steeves 2010E 2011E $269 $318 ($210) ($215) ($155) ($124) $23 $21 ($73) ($1) $38 $36 $234 $237 $195 $195 $467 $468 1. Coverage Group (CIBC Estimates) Share Price $13.5 50% 0.50) ($2.00 Dividend (NTM) / Freq. FDC $27. 5) Our base commodity price assumptions are US$$85.0 9. 4) Basic payout ratio is calculated total dividends (excluding the effect of DRIP) paid as a % of operating cash flow.55 $30. and US$$95.87E $2.97/mcf (2012E).00/bbl (long term) for WTI crude oil. 63 Pengrowth Vermilion Crescent Point Baytex Daylight Enerplus Average Trilogy Peyto ARC NAL . after mkt.26) ($0.).1x 9.000 20. C$$0.3% 2011E P/CF 6.13 ($1. / Yield: $0. and evidences its high-quality asset base.5 0. Business Dev NOTES 1) Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues). Koyanagi 2010E $45. INFLOWS D/CF (NAE) VALUATION SUMMARY Outflows vs.). with FX of $4.4 Proved + Probable (2P) 103. Avg.1x target multiple to our Risked NAV of $15.4x Financial Flexibility ($MM) Cash Flow from Operations 6 Capital Spending Dividends DRIP Surplus (Deficit) Working Capital Deficit Bank Debt Senior Notes/Other Debt Net Debt at Year-end Debt / CF (Y/E Debt.07 $32.5x 3 3. and a strong balance sheet.0x 2. We believe NAL’s track record of operational execution bodes well for the upcoming update.473A 30. (NAE .35 USD/Cdn (2011E).Shen@cibc.5 60.000 15.52) $24.2%) Position President & CEO VP Finance & CFO Position VP.50) ($2.5% Shares O/S(1): 146.000 5.2 FD&A . PROPERTY OVERVIEW PRODUCTION & RESERVES GROWTH Production Growth (Per Share) Production (NAE) PPS Growth (NAE) PPS Growth (Avg) 35.174 $22.53A 29. the average of 5.5x 1 1.9x 9.02 12 To 18 Month Price Target: C$16.3%). as well as year-end results/reserve reporting (expected on Mar.36 94% $94.93 NAL Group Average MANAGEMENT (Ownership: 0. attractive Cardium acreage.25 125% 1 100% 0.00/mcf CIBC Base Cmdty Prices US$50/bbl C$4. Key Assets: Key assets include NAL’s Cardium tight oil at Garrington & Cochrane (southern AB). Other notable assets include its Viking light oil play at Provost/Irricana (AB).75 75% 0.000 0 2007A 2008A 2009A 2010E 2011E 20% 15% 10% 5% 0% -5% -10% -15% 120 105 90 75 60 45 30 15 0 2005A 2006A 2007A 2008A 2009A (% change .000 25. and C$$0. and its conventional Mississippian light oil play (southeast SK).120A $0.000E $1. Relative Valuation: NAL is currently trading at a Price to Risked NAV ratio of 87% and a 2011E EV/DACF multiple of 7.31) $28.5 Total Proved (1P) 71. US$$90.C.0x 0.0x (versus the group averages of 94% and 9.00/mcf Key Valuation Metrics vs. incl.7x 1.27) ($0. C$0.0x 8. Inflows4 175% 1. Wiswell Keith A. incl.43A $0.1x P/Core NAV 183% 181% EV/ EV/2P P/Risked Production Reserves NAV ($/Boe/d) ($/Boe) 87% $77.0 PDP % of Total Proved 85% 85% Total Proved % of P+P 69% 69% 2 2P Reserve Life . 9th.37 $25.84 / mthly / 6.1x 9.ca SUMMARY & INVESTMENT THESIS Investment Thesis: We have a Sector Outperformer rating on NAL Energy Corp.87 3 Cash Recycle Ratio 1.00) $32.MMboe (NAE) RPS Growth (NAE) RPS Growth (Avg) 25% 20% 15% 10% 5% 0% -5% -10% -15% (% change . McDougall John C. after mkt.909MM Average Trading Vol (50 day): 450.000E 52% 50% 5 2009A +Net Acq.00) $28.00/bbl (2011E).15E 31.00/bbl (2012E).84 ($1.YOY) Reserves Growth (Per Share) 2P Reserves .ca Diana Chaw (403-216-8518) Diana.35) ($11. FDC on a cash basis. Outflow s (incl DRIP) Basic Pay out Ratio 112% 105% 108% 108%108% 76% 77% 83% Risked NAV Price Target Crescent Point Progress Daylight Penn West PetroBakken Baytex Bonavista Perpetual Enerplus Average Pengrowth Vermilion Perpetual Bonterra Trilogy 12. 2011 NAL Energy Corp.97/mcf (2011E).610A $0.TSX) Current Price: C$13.26 ($8.1x 8.4 71.28) ($11.1x.2x Progress Peyto ARC Bonterra NAL Group Group Avg.25 25% 0 0% 150% Payout Ratios 125% 100% 75% 50% 25% NAE Group NAE Group NAE Group NAE Group NAE Group NAE Group NAE Group 5 Debt Metrics $35 $30 $25 $20 $15 $10 $5 $0 NAE Risked NAV (C$/Share) "Bluesky" NAV (unrisked) Risked NAV Core NAV 71% 87% 88% % Credit Facility Utilized % Credit Facility Utilized Total Debt Cash Flow Total Debt / /Cash Flow 3.5x $550 $235 (43%) Netback Analysis ($/Boe) Gross Revenue (net trans) Hedging Gains (Losses) Royalties Operating Costs Operating Netback G&A Interest Cap Tax/Other Cash Flow Netback Group avg Operating Netback Group avg Cash Flow Netback Name Marlon J.Chaw@cibc.68 PetroBakken Bonavista Penn West US$100/bbl C$7.41A 29. $$4.5x 7.85 USD/Cdn (2012E).3%).5x 2 2.YOY) RELATIVE RISK & MAGNITUDE OF UNBOOKED PROSPECTS Q1 Q2 Q3 Q4 FY % Gas Production (Boe/d) CFPS (Basic) 2010E 2010E 2011E 2011E 30.796E $0. Reserves (MMBoe) Proved Developed Producing 60.92 $2.04/share (less forecast dividends of $0.4x 6.5% 5.20 $27.2P.3x 9.86/share) versus the group average of 1.5% (versus the group average of 5.January 17.16 ($9.0 103.2x Reserve Engineers: McDaniel & Associates Consultants (MMboe (boe/d) DEBT & OUTFLOWS VS.50 USD/Cdn (longterm). its Wabamun oil asset (AB). AET NAE Group 2011E NAE Group NAE Group NAE Group NAE Group 2005 2006 2007 2008 2009 2010E 2005 2006 2007 2008 2009 2010E 2011E EV/DACF (2011E) Current Price 6.2x 11. with a 12-18 month price target of $16.93 2011E $51.4x11.1x 8. Potential Catalysts: Potential near term catalysts include 2011 guidance and an operational update (expected on Jan. and its Doig gas play (northeast B.5 150% 1.1x.0x 1.97/mcf (long term) for AECO natural gas.00/share.6MM Market Cap.00/share is based on a 1.000 Sector Outperformer Jeremy Kaliel.0x D/CF (Group) D/CF (NAE) (AET) Credit Line Drawn (NAE) D/CF (Group) Credit Line Drawn Credit Line Draw n(Group) (AET) (NAE) Credit Line Draw n (Group) Price to Risked NAV 97% 93% 94% 94% 101% 104% Total Pay out Ratio Inflow s v s. 6) Based on net capex including the effect of Alberta royalty credits.8x 8. and inflows versus outflows is calculated as total CAPEX and dividends (including the effect of DRIP) as a % of operating cash flow. Operations & COO VP.1x 10.0x 2011E EV/DACF 7.ca Jeff Shen (403-221-5047) Jeff. 25th. total payout is calculated as total CAPEX and dividends (excluding the effect of DRIP) as a % of operating cash flow.02 Expected Return 29% 21% 2011E Yield 6.0x 10.

Cardium First Mover Our Top Higher-yielding Pick . 64 . Bloomberg.January 17. 2011 Source: CIBC Trendspotting Matrix.

Toronto.708. including potential conflicts of interest. and. CIBC World Markets Inc. 2) the rebound in manufacturing activity takes hold.25 $31.onex. See "Important Disclosures" section at the end of this report for important required disclosures. Canada M5J 2S8 (416) 594-7000 Paul Holden. Reuters. the highest in our coverage universe.cibcwm. CIBC World Markets does and seeks to do business with companies covered in its research reports.com . Asset dispositions have been a major driver of share price performance in the past and we think 2011 could be a big year for dispositions following a slow 2010.25 price target implies a return to target of 28.Institutional Equity Research Company Update January 17. 2011 Stock Rating: Multi-Industry Sector Outperformer Sector Weighting: Onex Corporation Expecting NAV Growth To Accelerate And NAV Discount To Narrow $40. 3) additional fees are earned from new funds.3M 89.11 / 0. www. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.540.4%. where applicable. Our $40. CFA 1 (416) 594-8417 Paul. 161 Bay Street. Daily Trading Vol. Market Weight 12-18 mo. CFA 1 (416) 956-6676 Kevin.4% December $35.35 We believe that Onex's NAV growth will accelerate in 2011 as: 1) conditions for monetization opportunities become more attractive.Cheng@cibc.7M $0.59 per Shr NM $513. P.ca Find CIBC research on Bloomberg.Holden@cibc. but there is no longer a cost of carry for shareholders and the stock has actually traded at a premium to NAV in the past when disposition activity is robust. Price Target OCX-TSX (1/12/11) Key Indices: Toronto NM $24.1x NM 30. Brookfield Place.00M Nil $1. We are of the opinion that the discount to NAV should narrow as well.4x Stock Price Performance Source: Reuters Company Description Founded in 1984.92A ($0. IPO conditions are improving with rising equity markets and there are many corporations and private equity firms flush with cash. Market Capitalization Dividend/Div Yield Fiscal Year Ends Net Asset Value 2011 ROE (E) Net Cash Preferred Common Equity Convertible Available Earnings Per Share* 2009 2010 2011 P/E 2009 2010 2011 * From continuing operations. Box 500.17E) $1.02-$31. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. unless otherwise stated. firstcall. Current trends suggest that those two factors are heading in the right direction for Onex. Onex trades at a 12% discount to NAV. 34.03E Current 3-5-Yr.O. Rate (E) 52-week Range Shares Outstanding Float Avg.com and ResearchCentral.ca Kevin Cheng. The greatest risks to our call are a collapse in manufacturing activity and a lack of appetite for IPOs.0M No $0.65 118. Investors should consider this report as only a single factor in making their investment decision.000 $3.. 4) recently invested cash starts to earn a return. As a result.3M Shrs 230. EPS Gr. Onex Corporation is one of North America's oldest and most successful private equity and alternative asset managers.com All figures in Canadian dollars.

18 20.78 0.34 $35.87 2.3 na na 5.2% 2010A 35.2% C$31. 2011 Onex Corp.82 0.210 Historical Premium / Discount To NAV 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 -1 std dev Av erage +1 std dev 66 .To 18. Tropicana Las Vegas Tomkins Markup For Private Investments Center for Diagnostic Imaging Total Private Companies Onex Real Estate Partners Onex Credit Partners ONCAP II Other Investments Cash and Near-Cash Total NAV Current Price Premium / Discount to NAV Source: Company reports and CIBC World Markets Inc 2 Onex' Share 423 400 1400 800 252 277 255 NAV / share 2.59 Committed Investment Structure (US$) Direct Investments Onex Partners I Onex Partners II Onex Partners III ONCAP II Onex Real Estate Partners Onex Credit Partners Shares NAV: Public Companies Emergency Medical Services Spirit Aerosystems Inc. having produced a 29% IRR since 1984.06 1.69 0.33 4. Investment Thesis Management has a long history of creating value.cheng@cibc.9% .59 31.8 8. Onex Partners III.67 2.0 470. CFA (416-956-6676) Kevin.January 17.Expecting NAV Growth To Accelerate And NAV Discount To Narrow .9% Capital na 1655 3450 4300 574 318 875 Market Price Value (C$) 67. are better today than at any time in the past due to the growing stream of management fees and its share of carried interest in the company's largest fund to date.8x 10.0 197.0 na na 115.10 0.6 250 191 244 191 175 133 109 113 59 354 267 21 2.26 0.61 1.17 5.9 31.8 3.41 6.3 4.2% 2011E 38.54 1. Unrealized carried interest Total Public Companies LTM NAV: Private Companies & Other Sitel Worldwide Allison Transmission Husky Injection Molding Systems Hawker Beechcraft Carestream Health The Warranty Group RSI Home Products TMS International ResCare Inc.5 na na na 3.9x 8.92 6.92 0.42 190 170 39 48 765 Value at Owned 4.78 0.87 2.70 0.447 97 97 211 80 513 4.ca Company Profile Onex is a private equity firm that invests its own capital alongside third-party capital raised through its Onex Partners and ONCAP fund families. The company was founded in 1984 and has produced a 29% annual rate of return on its investments.12 318 22.ca Kevin Cheng.50 2.0 na na na 38. This ability to create value and grow NAV warrants a valuation that is at a premium to NAV.68 4.61 2.96 0.210 5.12 0.97 0.48 1.25 Sector Outperformer Paul Holden. CFA (416-594-8417) Paul.47 NAV / share 2.48 1. (OCX .37 0. Celestica Skilled Healthcare Group Inc.82 24. Summary NAV By Industry Net Asset Value ($mlns) Per Share 611 682 434 340 301 175 211 97 97 2.5 Type Of Industry Manufacturing Healthcare Aerospace Customer Support Services Other Industries Financial Services Mid-cap Opportunities Credit Securities Real Estate Other Cash And Near-Cash items Total Assets % of Total 15% 16% 10% 8% 7% 4% 5% 2% 2% 70% 18% 12% 100% EV EBITDA / EBITDA Cost (C$) 114. The economics for Onex Corp.Month Price Target: All figures in millions except per share data Net Asset Value NAV P/NAV Y/Y chg in NAV 2008A 31.99 2.68 1.5 340 619.1 3.7% 2009A 32.35 C$40.0 96.948 749 513 4.77 3.TSX) Current Price : 12.44 0.6 17.11 1.55 11.82 0. Onex Corp is currently trading at a discount to NAV of 11.34 35.33 0.7x 5.0 8.35 -11.82 1.holden@cibc.6x 3. The management of third-party capital also produces management fees and the potential for carried interest.0 8.42 9.61 1. There is ample capital available for management to create value with 58% of NAV in private companies and another 12% in cash & equivalents.

January 17.Expecting NAV Growth To Accelerate And NAV Discount To Narrow . Bloomberg. 67 . 2011 Source: CIBC Trendspotting Matrix.

Nielsen@cibc. growing to 92 MBoe/d in 2011 and 104 MBoe/d in 2012 based only on development of Rubiales and Quifa. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.6M C$0.ca Find CIBC research on Bloomberg.Geol.to 18-month price target of C$43. EPS Gr.67 266. P.50 price target includes a base NAV estimate of C$23.0x 6. Our C$43.151.O. Brookfield Place. Investors should consider this report as only a single factor in making their investment decision. We expect the company's 2011 exploration drilling at Quifa.2 BBbls OOIP Rubiales field and will have increased gross production almost 12-fold to 170 MBbls/d by YE 2010.62 per Shr NM $168.60/FD share for the producing assets plus cash.5M 249.Macqueen@cibc. 2010 2011 2012 P/CF 2010 2011 2012 $2.cibcwm.31-C$35.ca Paul Nielsen 1 (403) 216-3403 Paul. Toronto. CPE-6 and La Creciente to fuel future growth. Since inception.com .38 / 1. As a result. CIBC World Markets Inc. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.50 C$33. Price Target PRE-TSX (1/12/11) Key Indices: TSXOilGas NM C$13. Canada M5J 2S8 (416) 594-7000 Ian Macqueen. Rate (E) 52-week Range Shares Outstanding Float Avg.pacificrubiales. Market Capitalization Dividend/Div Yield Fiscal Year Ends Net Asset Value 2011 ROE (E) Net Debt Preferred Common Equity Convertible Available Cash Flow Per Share We recently initiated coverage of Pacific Rubiales Energy with a Sector Outperformer rating and now have a 12. PRE has a series of upcoming catalysts that should continue to drive the stock to new highs. Box 500. management has focused on developing the 4.903 $9.7M Shrs 1. We forecast 57 MBoe/d (after royalty) in 2010.985:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports. Additional discoveries on the offsetting Quifa block should provide another 30 MBbls/d of production by YE 2010.com All figures in US dollars. 1 (403) 260-8675 Ian. is a Canadian-based company and producer of heavy oil and natural gas with producing assets in Colombia and exploration assets in Peru. unless otherwise stated.5x Stock Price Performance Source: Reuters Company Description Pacific Rubiales Energy Corp. 2011 Stock Rating: Oil & Gas . Reuters. including potential conflicts of interest. where applicable.42E $4.. See "Important Disclosures" section at the end of this report for important required disclosures.0M Nil NM Yes Current C$43. CPE-6 & Topoyaco that will be drilled in 2011.50.82 3-5-Yr. liabilities and dilutive proceeds and C$20.International E & P Sector Outperformer Sector Weighting: Pacific Rubiales Energy Corp. Daily Trading Vol.46/FD share unrisked) for prospects in Quifa.27E 14.1% December $43.com and ResearchCentral.880. P. In our view.02/FD share in risked upside (C$38. 161 Bay Street.2x 8.29E $5.Institutional Equity Research Company Update January 17. www. Strong Growth Continues Market Weight 12-18 mo.(C$0. firstcall.

Strong Growth Continues - January 17, 2011

Pacific Rubiales Energy Corp. (PRE-TSX, PREC-BVC) Sector Outperformer Current Price: C$33.82 Analyst: Ian Macqueen, P.Geol. Ph: (403) 260-8675 E-mail: Ian.Macqueen@cibc.ca Price Target: C$43.50 Associate: Paul Nielsen, Ph: (403) 216-3403 E-mail: Paul.Nielsen@cibc.ca Target Return: 29.7%
Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization - $M Net Debt - $mm Enterprise Value - $M Float - mm Average Trading Volume (50 Day) Annual Dividend / Yield 2010E C$33.82 285 C$9,624 C$240 C$9,863.9 250 1,880,903 C$0.38 / 1.1% Net Asset Valuation - 2009 Total Risked Asset Value Total Risked NAVPS - 10% P/NAVPS (Risked) Target P/NAVPS (Risked) Total Unrisked Asset Value Total Unrisked NAVPS - 10% P/NAVPS (Unrisked) Target P/NAVPS (UnRisked) C$13,040 C$43.62 78% 100% C$18,553 C$62.06 54% 70%

Note: All company figures are in USD unless stated otherwise CIBC Deck NYMEX WTI (US$/bbl) NYMEX Gas (US$/mcf) FX (US$/C$) Operating Statistics Colombian Natural Gas Production Natural Gas (mmcf/d after royalties) Colombian Oil Production Oil (bbl/d after royalties) Production (mboe/d after royalties) Natural Gas % Production Per Share (boe/d per MM FD) Production Growth Per Share - % Production Per Share (boe/d per MM FD) - Debt Adjusted Financial Statistics - US$mm (except per share values) Colombia EBITDA Total EBITDA Total Company Operating Cash Flow (US$mm) CFPS (Diluted) Operating Income Operating EPS (Diluted) Net Capex Net Capex/Cash Flow - % Free Cash Flow Debt Analysis Net Debt - $mm Net Debt/Cash Flow Net Debt/EV Valuation EV / DACF Target EV / DACF P/CFPS Target P / CFPS
Source: Company reports and CIBC World Markets Inc.

2009 $61.99 $3.94 $0.88 2009 44 44 28,026 28,026 35.4 21% 124 57% 121 2009 $247 $247 $196 $0.93 ($154) ($0.72) $350 178% ($154) 2009 $236 1.2x 0.0x 2009 38.5x 49.2x 36.9x 47.5x

2010E $79.51 $4.37 $0.97 2010E 58 58 47,525 47,525 57.2 17% 201 62% 196 2010E $871 $871 $689 $2.42 $236 $0.83 $858 124% ($169) 2010E $237 0.3x 0.0x 2010E 13.6x 17.4x 14.2x 18.2x

2011E $85.00 $4.50 $0.97 2011E 56 56 82,950 82,950 92.3 10% 324 61% 316 2011E $1,675 $1,675 $1,268 $4.29 $639 $2.16 $1,120 88% $148 2011E $189 0.1x 0.0x 2011E 7.8x 10.0x 8.0x 10.3x

2012E $85.00 $4.50 $0.97 2012E 56 56 94,222 94,222 103.5 9% 364 12% 355 2012E $2,072 $2,072 $1,559 $5.27 $851 $2.88 $900 58% $659 2012E ($370) (0.2x) (0.0x) 2012E 6.1x 7.9x 6.5x 8.4x

69

Strong Growth Continues - January 17, 2011

Source: CIBC Trendspotting Matrix, Bloomberg.

70

Institutional Equity Research Company Update
January 17, 2011
Stock Rating:

Precious Metals

Sector Outperformer
Sector Weighting:

Pan American Silver Corp.
Navidad Permitting Is Key Catalyst In 2011

Overweight
12-18 mo. Price Target PAAS-NASDAQ (1/12/11) Key Indices: $52.00 $37.69 Gold/Sil, TSX/SP - Canadian Gold NM $20.00-$42.33 106.9M 106.9M Shrs 1,400,000 $4,029.8M $0.10 / 0.3% December $13.66 per Shr NM $0.0M Nil $1,460.6M No
Current

3-5-Yr. EPS Gr. Rate (E) 52-week Range Shares Outstanding Float Avg. Daily Trading Vol. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2011 ROE (E) LT Debt Preferred Common Equity Convertible Available
Earnings Per Share

We believe Pan American deserves to trade at a premium relative to its peers based on a track record of accretive acquisitions and a mine-building team that is second to none in the industry. PAAS has a strong balance sheet with ~$290MM in cash and short-term investments and no debt. PAAS has reduced reliance on base metals credits with operations like Alamo Dorado and Manantial Espejo, which have no exposure to base metals and, conversely, have a significant amount of gold production. Ramp-ups at Manantial Espejo and San Vicente are now complete. While the production profile is expected to remain flat over the next few years, the company's Navidad Project, one of the largest undeveloped silver properties in the Americas, has the potential to double current production levels in 2014. Navidad has considerable permitting risk, as open-pit mining is currently banned in Chubut, Argentina. We believe PAAS will be successful in lifting the ban (expected Q2/11), which should result in an immediate increase in the share price given PAAS' mine-building track record.

2010 2011 2012 P/E 2010 2011 2012

$1.09E $2.69E $2.89E 34.6x 14.0x 13.0x

Stock Price Performance

Cash Flow Per Share 2010 2011 2012 P/CF 2010 2011 2012

$2.00E $3.94E $4.12E 18.8x 9.6x 9.1x
Source: Reuters

Company Description Pan American Silver Corp. is a primary silver producer offering investors considerable production growth and leverage to silver prices. www.panamericansilver.com

All figures in US dollars, unless otherwise stated.

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, where applicable.
CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 (416) 594-7000

Brian Quast 1 (416) 956-3725
Brian.Quast@cibc.ca

Robert Hales, CFA 1 (416) 594-7261
Robert.Hales@cibc.ca

Find CIBC research on Bloomberg, Reuters, firstcall.com and ResearchCentral.cibcwm.com

47 $24. based on $20 silver) Discount Rate: Properties Huaron Quiruvilca La Colorada Morococha Alamo Dorado Stockpiles Manantial Espejo San Vicente Loma de la Plata Other 5% Ownership 100% 100% 100% 92% 100% 100% 100% 95% 100% NAV $196 $44 $368 $272 $329 $13 $553 $82 $678 $50 $2.687 Silver Wheaton Cash Debt Total PRICE ASSUMPTIONS 2009A Silver Gold Zinc Lead Copper US$/oz US$/oz US$/lb US$/lb US$/lb $14.76 $6.00 PAAS-NASDAQ (01/12/11): $37.ca Proven & Probable Measured & Indicated Morococha Proven & Probable Measured & Indicated La Colorada Proven & Probable Measured & Indicated Quiruvilca Proven & Probable Measured & Indicated Alamo Dorado Proven & Probable Measured & Indicated Manantial Espejo Proven & Probable Measured & Indicated San Vicente Proven & Probable Measured & Indicated Silver Stockpile Probable Navidad Measured & Indicated Pico Machay Measured & Indicated Calcatreu Indicated 20x 18x P/2012E CF ($30/oz Silver) 16x 14x 12x 10x 8x 6x 4x 2x 0. Price Target: $52.35 $6.045 13. NET ASSET VALUE (in US$ millions.68 RESERVES AND RESOURCES (in thousands unless otherwise indicated) Tonnes 10.ca Robert Hales.12 $5.765 30. (416) 956-3725 brian.976 14.17 $0.80 $1.468 41.969 2.70 ($0.254 1.617 189 155.284 33.551 17.41 $5. is a primary silver producer with operating assets in Mexico. except per share amounts) 2009A Revenues Expenses Operating Expenditures S.315 30.19) $26.34 $0.0x 3.73 $9.146 3.606 Silver Eq.895 7.388 770 3.70 $974 $0.00 $1. The company is also well positioned to make future acquisitions.12 107 US$/oz US$/oz $5. Peru. $12.372 10. 2009A 23 38 101 98 31 14 2010E 25 37 91 99 31 11 2011E 24 36 104 103 33 16 2012E 25 35 90 105 34 17 2013E 31 43 76 111 50 19 INCOME STATEMENT (in US$ millions.5x 3.00 $1.20 $4. Argentina.quast@cibc.096 21.842 1.69 Fiscal Year End December 31 COMPANY DESCRIPTION Pan American Silver Corp.164 1.87 50 40 30 20 10 0 2009A Silver Production Total Cash Cost Per Silver Oz.817 37.January 17. Gold Zinc Lead Copper Total Cash Costs Per Silver Per Silver Eq.01 $10.853 NAV/sh $1.660 3.76 $0.340 6.35 Silvercorp Pan American Fortuna Silver Endeavour Silver Coeur d'Alene Hecla First Majestic 2010E $20.0x 0.hales@cibc.00 $4.75 $3.83 $0.717 28.69 $3.00 $6.836 39. (416) 594-7261 robert.282 1.65 $2.37 2011E $28.94 $0.786 2.678 1. (416) 956-6787 barry.41 $3.457 11. (ounces) 128.482 82.014 'mln oz 'mln oz '000 oz 'mln lbs 'mln lbs 'mln lbs ('mln ounces) $246 $13 $78 $10 $12 $359 $91 $28 $1 $70 $0.500 2.388 8.cooper@cibc.700 $0.371 30.585 $288 ($21) $2.00 107 $388 $18 $83 $40 $0 $529 $449 $157 $4 $292 $2.341 2.935 632.600 $0.75 2012E $30.75 $3.08 $0. 5% Discount Rate) PRODUCTION AND COSTS Production Silver Silver Eq.00 $2.25 2.484 12. INVESTMENT THESIS Pan American is our top pick in our silver coverage universe with a proven record of operational expertise and a strong balance sheet.64 87 $316 $15 $95 $34 -$5 $456 $190 $76 $3 $114 $1.600 7.00 $10.5x 1. except per share amounts.132 9.027 48.00 2010E 2011E 2012E 2013E Silver Eq. Oz.94 107 $395 $18 $78 $40 $0 $531 $483 $169 $5 $314 $2.225 $0. Production Total Cash Cost Per Silver Eq.96 $11.678 12.5x P/NAV ($20/oz Silver. 2011 Precious Metals PAN AMERICAN SILVER Stock Rating: Sector Outperformer Sector Weighting: Overweight 12-18 mo.0x 1.55 $2.78 $2.75 $3.Navidad Permitting Is Key Catalyst In 2011 . and Bolivia.89 $4.09 $2.697 7.55 $3.00 $0.230 6.90 $0.ca Barry Cooper.00 $1.G&A D.44 $2.00 .009 77. and provides investors leverage to silver prices.669 36.90 $0.935 799.168 60.D&A Exploration Other Expenses Total Expenses Income Before Taxes Income/Mining Tax Non-controlling Interest Net Income EPS CFPS Shares Outstanding $455 2010E $645 2011E $978 2012E $1.000 18.10 $8.200 10.363 0 6.18 $2. Source: Company reports and CIBC World Markets Inc 72 (US$/oz) $8.5x Gammon Gold Silver Standard Huaron Grade Ag (g/t) 184 158 174 184 415 216 159 132 95 65 153 102 392 167 318 127 0 26 Silver (ounces) 64.926 14.995 Brian Quast.435 9.0x 2.

Navidad Permitting Is Key Catalyst In 2011 - January 17, 2011

Source: CIBC Trendspotting Matrix, Bloomberg.

73

Institutional Equity Research Company Update
January 17, 2011
Stock Rating:

Oil & Gas Royalty Trusts/Dividend Corporations

Sector Outperformer
Sector Weighting:

Penn West Petroleum Ltd.
Tight Oil Resource Plays Underpin Impressive Asset Base
$32.00 $25.14 At current levels, we believe Penn West's compelling resource potential justifies its place as one of our top "value picks" today. We expect Penn West will begin to translate its resource potential into production growth early in 2011, potentially unlocking a step change in valuation for the stock. Potential near-term catalysts include year-end results/reserve reporting (expected on February 17). Key to executing on production growth will be Penn West's ability to tie-in its target of 160 wells in Q4/10 (which compares to 110 wells tied in during the first three quarters of the year). Key assets include Penn West's tight oil plays in the Cardium (AB), the Amaranth (MB), the Viking (SK & AB), and the tight Carbonates (AB). Other notable assets include its heavy oil resource play at Seal (AB) and its emerging shale gas play in the Cordova Embayment (northeast BC). Our price target of $32.00/sh is based on a 1.0x target multiple to our Risked NAV (vs. the average of 1.1x). Penn West trades at a P/Risked NAV of 77% and a 2011E EV/DACF multiple of 8.8x (vs. averages of 94% and 9.1x) with a 4.3% yield (vs. the average of 5.3%).

Market Weight
12-18 mo. Price Target PWT-TSX (1/12/11) Key Indices: S&P/TSX Energy Trust, S&P/TSX Income Trust Composite Projected Total Return 27.3% 52-week Range $17.09-$25.14 Units Outstanding 454.7M Distr. Frequency $0.09 Monthly Avg. Daily Trading Vol. 910,000 Market Capitalization $11,431.2M Dividend/Div Yield $1.08 / 4.3% Fiscal Year Ends December P+P RLI (years) 11.0 2011 EV/DACF 8.8X Net Debt $2,832.0M Net Asset Value $32.58 per Unit Net Debt/CF 2.0X Convertible Available Yes
Cash Flow per Share

2009 2010 2011 P/CF 2009 2010 2011

Current

$3.62A $2.66E $3.24E 6.9x 9.5x 7.8x

Stock Price Performance

Cash Distribution Per Unit 2009 2010 2011 Cash-on-Cash Yield 2009 2010 2011

$2.04A $1.56E $1.08E 8.1% 6.2% 4.3%
Source: Reuters

Company Description Penn West Exploration converted from a trust to a dividend-paying corporation on January 3, 2011. www.pennwest.com Jeremy Kaliel 1 (403) 260-8657
Jeremy.Kaliel@cibc.ca

All figures in Canadian dollars, unless otherwise stated.

10-105922 © 2010

Diana Chaw 1 (403) 216-8518
Diana.Chaw@cibc.ca

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, where applicable.
CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 (416) 594-7000

Jeff (Sizhuo) Shen 1 (403) 221-5047
jeff.shen@cibc.ca

Find CIBC research on Bloomberg, Reuters, firstcall.com and ResearchCentral.cibcwm.com

Tight Oil Resource Plays Underpin Impressive Asset Base - January 17, 2011

Penn West Exploration (PWT - TSX)
Current Price: C$25.14 12 To 18 Month Price Target: C$32.00 Dividend (NTM) / Freq. / Yield: $1.08 / mthly / 4.3% Shares O/S(1): 454.7MM Market Cap.: $11,431MM Average Trading Vol (50 day): 930,000

Sector Outperformer
Jeremy Kaliel, MBA (403-260-8657) Jeremy.Kaliel@cibc.ca Diana Chaw (403-216-8518) Diana.Chaw@cibc.ca Jeff Shen (403-221-5047) Jeff.Shen@cibc.ca

SUMMARY & INVESTMENT THESIS
Investment Thesis: We have a Sector Outperformer rating on Penn West Exploration with a 12-18 month price target of $32.00/share. At current levels, we believe Penn West’s compelling resource potential justifies its place as one of our top ‘value picks’ today. We expect Penn West will begin to translate its resource potential into production growth early in 2011, potentially unlocking a step change in valuation for the stock. Potential Catalysts: Potential near term catalysts include year-end results/reserve reporting (expected on Feb. 17th). Key to executing on production growth will be Penn West’s ability to tie-in its target of 160 wells in Q4/10 (which compares to 110 wells tied in during the first 3 quarters of the year). Key Assets: Key assets include Penn West’s tight oil plays in the Cardium (AB), the Amaranth (MB), the Viking (SK & AB), and the tight Carbonates (AB). Other notable assets include its heavy oil resource play at Seal (AB) and its emerging shale gas play in the Cordova Embayment (northeast BC). Relative Valuation: Penn West is currently trading at a Price to Risked NAV ratio of 77% and a 2011E EV/DACF multiple of 8.8x (versus the group averages of 94% and 9.1x, respectively) while providing a current yield of 4.3% (versus the group average of 5.3%). Our 12-18 month price target of $32.00/share is based on a 1.0x target multiple to our Risked NAV of $32.58/share (less forecast dividends of $1.08/share) versus the group average of 1.1x.

PROPERTY OVERVIEW

PRODUCTION & RESERVES GROWTH Production Growth (Per Share)
Production (PWT) PPS Growth (PWT) PPS Growth (Avg)

Reserves Growth (Per Share)
2P Reserves - MMboe (PWT) RPS Growth (PWT) RPS Growth (Avg) 800 700 600 500 400 300 200 100 0 2005A 2006A 2007A 2008A 2009A 25% 20% 15% 10% 5% 0% -5% -10% -15%
(% change - YOY)

RELATIVE RISK & MAGNITUDE OF UNBOOKED PROSPECTS

225,000 200,000 175,000 150,000 125,000 100,000 75,000 50,000 25,000 0 2007A 2008A

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

(% change - YOY)

2009A

2010E

2011E

Q1 Q2 Q3 Q4 FY % Gas

Production (Boe/d) CFPS (Basic) 2010E 2010E 2011E 2011E 164,650A $0.81A 163,700A $0.62A 164,087A $0.59A 166,549E $0.64E 164,750E 173,000E $2.66E $3.24E 41% 40%

2009A +Net Acq. Reserves (MMBoe) Proved Developed Producing 424.0 411.6 Total Proved (1P) 497.0 482.5 Proved + Probable (2P) 686.8 666.0 PDP % of Total Proved 85% 85% Total Proved % of P+P 72% 72% 2 2P Reserve Life - Years 11.1 11.0 FD&A - 2P, incl. FDC $9.51 3 Cash Recycle Ratio 0.5x Reserve Engineers: Gilbert Laustsen Jung Associates Ltd.

(Mmboe)

(boe/d)

DEBT & OUTFLOWS VS. INFLOWS
D/CF (Group) D/CF (PWT) Drawn (PWT) (AET) Credit Line D/CF (Group)Drawn (Group) Credit Line Credit Line Draw n (PWT) (AET) Credit Line Draw n (Group)

VALUATION SUMMARY Outflows vs. Inflows4
200% 1.5 175% 1.25 150% 1 125% 100% 0.75 75% 0.5 50% 0.25 25% 0 0% 150% Payout Ratios 125% 100% 75% 50% 25% PWT Group PWT Group PWT Group PWT Group PWT Group PWT Group PWT Group

5

Debt D/CF (PWT)

Metrics

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0

PWT Risked NAV (C$/Share)
"Bluesky" NAV (unrisked) Risked NAV Core NAV
87% 88%

% Credit Facility Utilized % Credit Facility Utilized

Total Debt Cash Flow Total Debt //Cash Flow

4.0x 3 3.5x 2.5 3.0x 2 2.5x 2.0x 1.5 1.5x 1 1.0x 0.5 0.5x 0 0.0x PWT Group

Total Pay out Ratio Inflow s v s. Outflow s (incl DRIP) Basic Pay out Ratio

Price to Risked NAV
97% 93% 94% 94% 101% 104%105% 83%

112% 108%108%108%

Risked NAV Price Target

71%

76% 77%

Crescent Point

Progress

Daylight

PetroBakken

Penn West

Baytex

Bonavista

Perpetual

Enerplus

Average

Group Group Avg. Avg. PWT Group

PWT AET Group

PWT Group

PWT Group

2005

2006

2011E 2007 2008

2009 2010E

2005

2006

2007

2008

2009 2010E 2011E

EV/DACF (2011E)
6.4x 6.5x 7.0x 10.1x 10.7x 8.8x 8.9x 9.1x 9.1x 9.3x 9.5x 8.0x 8.1x 8.2x

Pengrowth

Vermilion Bonterra

Bonterra

Financial Flexibility ($MM) Cash Flow from Operations 6 Capital Spending Dividends DRIP Surplus (Deficit) Working Capital Deficit Bank Debt Senior Notes/Other Debt Net Debt at Year-end Debt / CF (Y/E Debt, Year CF) Total Credit Facility (Current) Facility Utilized (Current) Name William Andrew Murray Nunns Todd Takeyasu David Middleton Thane Jensen 2010E 2011E $1,173 $1,492 ($1,000) ($1,100) ($688) ($498) $121 $100 ($394) ($6) $195 $178 $887 $913 $1,907 $1,904 $2,989 $2,995 2.5x 2.0x $2,250 $639 (28%)

Netback Analysis ($/Boe) Gross Revenue (net trans) Hedging Gains (Losses) Royalties Operating Costs Operating Netback G&A Interest Cap Tax/Other Cash Flow Netback Group avg Operating Netback Group avg Cash Flow Netback Name Mark Fitzgerald Hilary Foulkes Keith Luft Bob Shepherd 2010E $49.74 ($0.37) ($9.12) ($15.52) $24.74 ($2.27) ($2.87) $0.00 $19.60 $30.40 $25.96 2011E $54.25 ($0.19) ($10.18) ($15.50) $28.37 ($2.25) ($2.49) $0.00 $23.63 $32.22 $27.69

11.1x 11.4x

12.2x

Current Price

PetroBakken

Bonavista

Vermilion Crescent Point Baytex

Penn West

US$100/bbl C$7.00/mcf

CIBC Base Cmdty Prices

US$50/bbl C$4.00/mcf

Key Valuation Metrics vs. Coverage Group (CIBC Estimates) Share Price $25.14 Expected Return 32% 21% 2011E Yield 4.3% 5.3% 2011E P/CF 7.8x 8.0x 2011E EV/DACF 8.8x 9.1x P/Core NAV 152% 181% EV/ EV/2P P/Risked Production Reserves NAV ($/Boe/d) ($/Boe) 77% $82,448 $21.42 94% $94,174 $22.93

Penn West Group Average

MANAGEMENT (Ownership: 0.2%)
Position CEO President & COO EVP & CFO EVP, Eng. & Cop. Dev. SVP, Operations Eng. Position SVP, Production SVP, Business Dev. General Counsel SVP, Expl. & Dev.

NOTES
1) Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues). 2) Y/E P+P reserves divided by Q4 annualized production (Q4 2010E Production for 2010E). 3) Year operating netbacks divided by reported P+P FD&A cost, incl. FDC on a cash basis. 4) Basic payout ratio is calculated total dividends (excluding the effect of DRIP) paid as a % of operating cash flow, total payout is calculated as total CAPEX and dividends (excluding the effect of DRIP) as a % of operating cash flow. and inflows versus outflows is calculated as total CAPEX and dividends (including the effect of DRIP) as a % of operating cash flow. 5) Our base commodity price assumptions are US$$85.00/bbl (2011E), US$$90.00/bbl (2012E), and US$$95.00/bbl (long term) for WTI crude oil, C$0.97/mcf (2011E), C$$0.97/mcf (2012E), and C$$0.97/mcf (long term) for AECO natural gas, with FX of $4.35 USD/Cdn (2011E), $$4.85 USD/Cdn (2012E), and $$5.50 USD/Cdn (longterm). 6) Based on net capex including the effect of Alberta royalty credits.

Source: Company reports and CIBC World Markets Ltd.

75

Pengrowth

Perpetual

Progress

Daylight

Enerplus

Average

Trilogy

Peyto

ARC

NAL

Trilogy

Peyto

ARC

NAL

76 .Tight Oil Resource Plays Underpin Impressive Asset Base . 2011 Source: CIBC Trendspotting Matrix. Bloomberg.January 17.

PMG has a 45+ well exploration program in 2011 that is focused in some very prospective areas. Market Weight 12-18 mo.12 We recently initiated coverage of Petrominerales with a Sector Outperformer rating and now have a 12. Daily Trading Vol.ca Paul Nielsen 1 (403) 216-3403 Paul. including producing assets plus cash. Both of these areas afford the company an opportunity to make a material discovery that could reshape its future.0x 7. 1 (403) 260-8675 Ian. P. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.56E 7.02 per Shr NM $517. Reuters. which could drive the stock to new highs.67/FD share unrisked). Brookfield Place.1M C$0.9M 100.com and ResearchCentral.43M Nil NM Yes Current 3-5-Yr.4x 10. Canada M5J 2S8 (416) 594-7000 Ian Macqueen.39E $5. Rate (E) 52-week Range Shares Outstanding Float Avg.Nielsen@cibc.06E $3. where applicable.com . is C$23.petrominerales. See "Important Disclosures" section at the end of this report for important required disclosures.070 $3.32/FD share.(C$0. Market Capitalization Dividend/Div Yield Fiscal Year Ends Net Asset Value 2011 ROE (E) Net Cash Preferred Common Equity Convertible Available Cash Flow Per Share 2010 2011 2012 P/CF 2010 2011 2012 $5. firstcall. is a Latin America-based E&P company producing oil in Colombia with 17 exploration blocks in the Llanos and Putumayo Basins and five exploration blocks in Peru.00.00 C$37. CIBC World Markets Inc.6x Stock Price Performance Source: Reuters Company Description Petrominerales Ltd. liabilities and dilutive proceeds. Investors should consider this report as only a single factor in making their investment decision. Toronto.0M Shrs 601. EPS Gr. 2011 Stock Rating: Oil & Gas . Box 500. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Newer areas of exploration for 2011 include the deep foothills (two 25MMBbls+ prospects) and a burgeoning heavy oil trend (50 MMBbls+ prospects). We have also included C$18.ca Find CIBC research on Bloomberg. Sixteen of the best prospects will be drilled in 2011 (roughly 38% of the company's 2011 exploration program). www.to 18-month price target of C$42. unless otherwise stated. P.70/FD share in risked upside (C$54. including potential conflicts of interest.. As a result.57 102.Institutional Equity Research Company Update January 17.com All figures in US dollars.00. management has identified another 55 exploration prospects for future drilling.International E & P Sector Outperformer Sector Weighting: Petrominerales Ltd. Price Target PMG-TSX (1/12/11) Key Indices: TSXOilGas NM C$19. 161 Bay Street.85-C$37.3% December $42.Macqueen@cibc. Expecting Follow-up Success In A Big Exploration Year C$42.Geol. After shooting extensive high-quality 3D seismic data on the surrounding lands. which could be realized from 2011 exploration drilling. Our base NAV estimate for PMG. bringing our PT to C$42.50 / 1.985:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports.cibcwm.O.877.

88 2009 22.ca Associate: Paul Nielsen.5% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .00 $4.mm Average Trading Volume (50 Day) Annual Dividend / Yield 2010E C$37.5 0% 215 nmf 253 2009 $297 $297 $284 $2.50 $0.12 Price Target: C$42.3x 15.50 / 1.0x 2010E $79. Ph: (403) 260-8675 E-mail: Ian.00 $298 $298 105% ($15) 2009 $63 0.0x 7.301 100 601.070 C$0.% Production Per Share (boe/d per MM FD) .3% Sector Outperformer Analyst: Ian Macqueen.8x 6.273 26.10% C$77.5x 10.37 $0. 2011 Petrominerales Ltd.84 $100 $1.00 $4.06 $236 $2.3x 7.2x) 2010E 5.4x 2012E $85.$mm (except per share values) Colombia .969 38.7x 7.199 39.8x 10.Expecting Follow-up Success In A Big Exploration Year .56 $173 $1. 2009 $61.4x 8.$M Float .Nielsen@cibc.Geol.Macqueen@cibc.1x 14.12 104 C$3.199 39.99 $3.273 26. P.663 Total Unrisked NAVPS .98 P/NAVPS (Unrisked) 48% Target P/NAVPS (UnRisked) 54% CIBC Deck NYMEX WTI (US$/bbl) NYMEX Gas (US$/mcf) FX (US$/C$) Operating Statistics Colombian Natural Gas Production Natural Gas (mmcf/d before royalties) Colombian Oil Production Oil & Liquids (bbl/d before royalties) Production (mboe/d before royalties) Natural Gas % Production Per Share (boe/d per MM FD) Production Growth Per Share .1x) 2011E 6.2009 Total Risked Asset Value C$4.EBITDA Total EBITDA Total Company Operating Cash Flow (US$mm) CFPS (Diluted) Operating Income Operating EPS (Diluted) Capital Expenditures Net Capex Net Capex/Cash Flow .39 $240 $2.8x 13.2x 0.January 17.30 $482 $511 91% $52 2010E ($570) (1.490 22.97 2011E 39.2 0% 375 1% 441 2011E $720 $720 $532 $5.ca Net Asset Valuation .8x) (0.$mm Net Debt/Cash Flow Net Debt/EV Valuation EV / DACF Target EV / DACF P/CFPS Target P / CFPS Source: Company reports and CIBC World Markets Inc.6x 12.97 2010E 38.00 Target Return: 14. (PMG-TSX) Current Price: C$37.969 39.668 Total Risked NAVPS .51 $4.$M Net Debt .0x) (0.0 0% 373 73% 438 2010E $704 $704 $563 $5.$mm Enterprise Value . Ph: (403) 216-3403 E-mail: Paul.877 (C$577) C$3.02 88% P/NAVPS (Risked) Target P/NAVPS (Risked) 100% Total Unrisked Asset Value C$8.0x 78 .1x) 2012E 9.25 $630 $630 118% ($98) 2011E ($421) (0.% Free Cash Flow Debt Analysis Net Debt .50 $0.Debt Adjusted Financial Statistics .10% C$42.9x 2011E $85.5x) (0.490 22.64 $550 $550 147% ($176) 2012E ($193) (0.4x 7.3 0% 252 (33%) 295 2012E $526 $526 $374 $3.97 2012E 26.94 $0.0x 2009 13.

Bloomberg.Expecting Follow-up Success In A Big Exploration Year .January 17. 2011 Source: CIBC Trendspotting Matrix. 79 .

Daily Trading Vol. We believe QUX shares already reflect the potential downside associated with recent operational issues and are attractively priced given the company's strong leverage to copper prices and its potential to benefit from the Morrison production ramp-up and the advancement of Sierra Gorda. Reuters. Market Weight 12-18 mo.quadramining. albeit with above-average. We expect QUX's copper production to increase ~40% Y/Y.O. As a result. has quickly emerged as an Americas-focused developer and producer of copper.50 C$16.25A $2. and strong balance sheet. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. where applicable. including potential conflicts of interest.21E 24.Kodatsky@cibc. which is at a substantial discount to other copper-producing peers and represents a strong buying opportunity for investors seeking exposure to strong copper leverage and long-term production growth. CIBC World Markets Inc. near-term operational risk. Brookfield Place.330. low political risk profile. Investors should consider this report as only a single factor in making their investment decision. CFA 1 (416) 956-3287 Terry.com and ResearchCentral.1x 5. unless otherwise stated. Strong Copper Production Growth To Overcome Weak 2010 Operating Performance C$25. Canada M5J 2S8 (416) 594-7000 Alec Kodatsky 1 (416) 594-7284 Alec.Tsui@cibc. Price Target QUX-TSX (1/12/11) Key Indices: None NM C$8.128.7x 8. in our coverage universe. www.7x P/NAV.4x 4.989:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports. EPS Gr.97 Quadra FNX is an operationally diverse large-cap copper miner with an attractive growth pipeline.Institutional Equity Research Company Update January 17.2x 13.8M Shrs 1.71A $1. The company also holds the highest earnings and NAV leverage to copper.(C$0. The Victoria project should continue to advance.9M 186.0M Nil $2. our favored commodity exposure.ca Find CIBC research on Bloomberg.27 per Shr NM $0. QUX is trading at about 0. Box 500.cibcwm. P.com . Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2011 ROE (E) LT Debt Preferred Common Equity Convertible Available Earnings Per Share 2009 2010 2011 P/E 2009 2010 2011 $0. 2011 Stock Rating: Metals & Minerals Sector Outperformer Sector Weighting: Quadra FNX Mining Ltd. Management has delivered on promised production growth. which has future potential to add significant value..57 188. with copper output set to more than double by 2015 as Sierra Gorda enters production.4M Nil / Nil December $11.98-C$18. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.ca Terry K. firstcall.2x Source: Reuters Company Description Quadra Mining Ltd. 161 Bay Street. Tsui.024 $3. Toronto.com All figures in US dollars. due mainly to the addition of Morrison.3M No Current 3-5-Yr.31E $3.H.3x Stock Price Performance Cash Flow Per Share 2009 2010 2011 P/CF 2009 2010 2011 $1.05E 13.05E $4. See "Important Disclosures" section at the end of this report for important required disclosures. Rate (E) 52-week Range Shares Outstanding Float Avg.240.

as well as water rights acquisitions and permitting.9 $2.9 0.247 (133) 161 43 546 0 2.0 5.54 100% 7. 2009 Robinson Carlota Franke Sierra Gorda McCreedy Podolsky Levack Levack Footwall Operating Summary Robinson Copper Production (mlbs) Cash cost (US$/lb.16 4.36 1.83 3.19 0.average Minority interest / other Other non-core Enterprise value 20 2009A ## ## ## 0.Strong Copper Production Growth To Overcome Weak 2010 Operating Performance .62 2.43 3.02 1.With a strong financial position.97 12-18 Months Target Price: C$25.7 0.31 2.5 0.33 0.419 2.2 65.Debt repayment Free cash flow Free CFPS Operating free cash flow Balance Sheet Cash Other current assets Other assets Capital assets Total assets Current liabilities Debt (LT & current) Other liabilities Preferred equity Common equity Total liabilities and equity Net debt (cash) Enterprise Value Market capitalization Net debt .97 2010E 2.86 $1.53 1.11 $0.94 3. Investment Summary Quadra FNX has a strong metals production growth profile.80 $1. . Cu) Podolsky Copper Production (mlbs) Cash cost (US$/lb.98 1.ca Key Data 52-week trading range ($) Average daily trading volume (000) TSX index weight Shares outstanding (mm) Basic Fully diluted Public float Market capitalization . Cu) "Total" Cost (US$/lb.ca Terry Tsui (416-956-3287) terry.00 -$0.225) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ## 1.205 ## (133) (303) (789) (1.95 0.31 2. Cu) Morrison Copper Production (mlbs) Cash cost (US$/lb.Capital expenditures .average Preferred equity .2 0. Outlook . In our view.30 2.48 100% 13.tsui@cibc.904 Tonnes (mm) Grade Cu (%) Ni (%) Mo (%) 652.00 0. Cu) Levack Copper Production (mlbs) Cash cost (US$/lb.42% 0.6) nm nm 0.3 0.8 3.6 188.17) 1.0 15% 32% 0.9 45.3 4.205 3.897 161 43 615 0 4.54% 111.00 $1.7 155.32 $0.09% 0.02% 4. the company possesses advanced development project Sierra Gorda.9 60.60 2. a coppermolybdenum project in Chile.05 3.42 0.2 1.0 8.5 1.2 1.1 $0.801 965 840 591 591 2.8 1.quadramining.54 0.84% 0.88 2010E 9.98 1.205 3.02) ($0.Maintenance capex . will likely represent the medium-term catalysts.34 $1.50 $0.50 $2.50 Reserves & Resources At Dec.January 17.82 2011E 3.2 ## 1.972 (303) 161 43 603 0 3.15 0.50 (All figures in US$.25 25.500 0. The company's assets are located in politically stable. 8% real discount rate on assets.00 $0.43 100% 25.8 8.980 C$ 1. we expect the company to continue to focus on exploration that can yield new discoveries while maintaining its current strong production growth profile.21 4.38 2.62 2010E 942 378 267 202 205 1.00 2.12 0.57 Profile Quadra FNX is a growing copper producer with a significant nickel and precious metals production profile.03% 0.66 4085 5. 2011 Quadra FNX Mining Ltd.11 0.99 100% 2.25 4.7 142.06 1.7 104.00 0.4 5. .0 2.7 0. CIBC price forecasts and after tax. a robust balance sheet and the potential to add low-risk incremental growth at below-average capital costs.268 ## 247 425 425 425 ## 86 221 221 221 ## 781 1. Cu) Cash operating cost Royalties Total cash cost Non-cash cost (DDA) Total production cost G&A Interest cost Total cost MANAGEMENT Terry MacGibbon. Cu) McCreedy Copper Production (mlbs) Cash cost (US$/lb.11 2.82 ## 51 113 486 344 20 2009A 2010E 2011E 2012E ## 133 346 832 1.06 (789) (1.73) ($3.50 0.19 100% 28.31 2011E 10.17 1.0 66. CEO Web Site 20 2009A ## ## ## ## ## ## 460 174 89 80 80 0.902 2.8 10% 11% 0.26 0.7 ## 169.05 2222 13.71 Key Ratios Growth EBITDA YoY EBIT YoY EBT YoY OpFCF YoY 3-Yr CAGR EPS 3-Yr CAGR CFPS 3-Yr CAGR EBITDA 3-Yr CAGR EBIT Profitability EBITDA margin EBIT margin EBT margin Net margin Coverage Dividend cover (x) Interest cover (x) NAV Valuation (1) Mining assets McCreedy (100%) Podolsky (100%) Levack (100%) Morrison (100%) Robinson (100%) Carlota (100%) Franke (100%) Sierra Gorda (50%) Total NPV of mining assets Other assets/exploration Exploration/other assets Total other assets Corporate Equity investments Working capital Long-term debt Net asset value 2009A 6% 72% 108% -16% 302% 97% 276% 341% 38% 19% 18% 18% - 2010E 117% 202% 151% 122% 228% 709% 185% 89% 40% 28% 21% 22% $mm 67 210 117 1.00 ($4.10 1. www.9 $4.1 54.41 1.00 $0.904 ## 0 ## 0 ## ## ## 163 0 79 0 1.990 ## 1.com Source: Company reports and CIBC World Markets Inc.67% 6.5 10.27 0. 81 .247 2.4 22% 37% 0.980 2.39) 100% 0.8 1.99 2011E 4. except for Sierra Gorda (at 10%).kodatsky@cibc.4 4. CIBC Forecast Ni price (US$/lb) Cu price (US$/lb) C$ exchange rate (US$) 20 2009A ## ## ## 6.62 5.4 (13.416 1.54 ## 2012E 1.04 0.8 $2.21 2012E 9.14 0.basic ($mm) Cash ($mm) Working capital ($mm) Total debt ($mm) Common equity ($mm) Net debt/common equity (x) Year-end Dec.Development milestones of the Sierra Gorda project prefeasibility study.77 1.9 35.128 n/a 2010E 1.0 1.12 $0.0 13.972 3.08% 2. Cu) Franke Copper Production (mlbs) Cash cost (US$/lb.8 2.71% 1.0 30.07 1.2 0.76 1.7 56.08) $0.99 3. unless otherwise stated) Sector Outperformer Alec Kodatsky (416-594-7284) alec.5 116.00 0.5 24.808 1.0 $2.25 1005 27.00 2012E Sensitivity to ±10% Change in Forecast Price EPS ($) 2011E NAVPS ($) 2012E -5% -8% -8% -29% 3% 133% 46% 34% 54% 47% 33% 33% $/Shr.4 142.205 Q3 2010A 323 545 0 2.05 ($0.1 55. In addition.39% 65.09% 1.247 2.94 Cash cost (US$/lb Cu) $2. (QUX) Current Price: $16.23 $0. the market is not fully pricing in the start-up of the Morrison project.38 2012E 2.88 2.11 0.17 $1.26% 2009A 2010E 2011E 2012E 100% 122.2 10.225) 20 2009A 2010E 2011E 2012E ## 1.129.50 -$1.93 E Cu production (000 tonnes) 200 175 150 125 100 75 50 25 0 2009A 2010E 2011E Operating Metrics Ni production (000 tonnes) Cu production (000 tonnes) Cash cost (US$/lb Cu) Income Statement Revenue EBITDA EBIT EBT Reported income EPS ($) Cash Flow Earnings after tax + Depreciation & amortization + Deferred tax + Other Funds from operations Operating CFPS (ex minority) .08 $0.57 $1.12 0.6 1.4 5.25 2.222 2.41 2011E 1.57 1.09 0. Cu) Carlota Copper Production (mlbs) Cash cost (US$/lb.43 $2.768 2011E 169% 241% 219% 330% 6% 109% 27% 3% 56% 50% 36% 36% - 20 2009A 2010E 2011E 2012E ## 80 205 646 591 ## 32 88 101 121 (16) 22 57 12 ## ## 46 13 12 12 ## 142 328 816 736 ## 1.0 0.00 Cu 0.8 4.0 2.24 0.7 1.09% 188.131 581 345 598 903 3. 31 EPS ($) CFPS ($) Book value ($) NPV per share ($) P/E (x) P/CF (x) P/book value (x) P/NPV (x) EV/EBITDA (x) EV/EBIT (x) EV/OpFCF (x) ROE ROCE Dividend/share ($) 2009A 0.71 1. which has the potential to double its current copper production once in operation in 2014.02) 2009A 2010E 2011E 2012E 1.61 6.78 20.06 (1.085 4. which we expect to emerge as the company's highest operating margin asset as it ramps up to full production 2011.00 25.92% 8.5 32.090 3.93 1.50 $1.1 2.50 4.8 141. basic 0.4 $0.12 0.65 0.005 1.59 $1. mining-friendly jurisdictions in North and South America.29 2.66 ## 10 10 29 42 ## 80 205 301 351 0 0 0 0 0 ## 51 113 486 344 ## 0.62 1.90 3.73 23.8 13.952 200 200 (221) 270 567 4.6 0.0 55.00 Low: 8.897 4.00 Ni 0.00 High: 18.5 40.0 7.9 13.05 4.98 2012E 2E 6. Chairman Paul Blythe.016 911 646 646 3.The start-up of Morrison and the ramp-up at Carlota and Franke should drive the company’s near-term metals production growth.96 $1.23 $1. 31.3 1.27 $1.381 3.00 0.9 ($3.05 3090 5.

Bloomberg. 82 .Strong Copper Production Growth To Overcome Weak 2010 Operating Performance . 2011 Source: CIBC Trendspotting Matrix.January 17.

with a history of strong shareholder-friendly policies.7% December $7.ca All figures in Canadian dollars.com . and expect to see continued growth in data in future quarters. and owns the Toronto Blue Jays of MLB.) 2009A 2010E 2011E EV/EBITDA 2009A 2010E 2011E $4. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2011 ROE (E) Net Debt Preferred Common Equity Convertible Available Earnings Per Share 2009 2010 2011 P/E 2009 2010 2011 $2.0M Yes Current 3-5-Yr.101.0% $9.10E 14.125.546 $20. CFA Michael Lee. Rate (E) 52-week Range Shares Outstanding Float Avg.Rizzi@cibc. cable & telecom space.850. We continue to believe that wireless offers strong growth ahead despite competitive pressure. firstcall.com and ResearchCentral. CFA 1 (416) 594-7454 1 (416) 594-7907 Bob.6x 11.B-TSX (1/12/11) Key Indices: S&P/TSX 60 16.3x 6. unless otherwise stated.1% $30. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. P.Bek@cibc.cibcwm. Valuation Too Attractive. 161 Bay Street. See "Important Disclosures" section at the end of this report for important required disclosures. owns the largest wireless operator and cable operator in Canada. While Rogers' cable segment continues to show signs of maturity. at least in the short term.28 / 3. Rogers is well positioned to take on any TV competition. Investors should consider this report as only a single factor in making their investment decision. ensuring ARPU remains flat to slightly up by year-end.2 $4. Canada M5J 2S8 (416) 594-7000 Tony Rizzi 1 (416) 594-7299 Tony. Shareholder gains will come from solid free cash flow generation. we continue to believe Rogers represents good value for investors.ca Michaelc.2x 11.0 $4. Price Target RCI.5M Shrs 1. Even With Wireless Concerns $44.7x 6.19 per Shr 38. We rate Rogers Sector Outperformer with a $44 price target.15 Rogers is our top pick for 2011 in the media.3x Stock Price Performance EBITDA ($ mlns. where applicable. Daily Trading Vol. Brookfield Place.0M 484. www.04E $3.00 $35. EPS Gr. a focus on cost cutting should result in EBITDA growth.7 6.64-$41. Box 500.1x Source: Reuters Company Description Rogers Communications Inc. CIBC World Markets Inc.rogers. While we expect wireless competitive worries and pricing pressure to persist.ca Find CIBC research on Bloomberg. As a result. we remain bullish on the long-term fundamentals of wireless.524. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.64 574.O. CIBC World Markets does and seeks to do business with companies covered in its research reports.415.0M Nil $4.48A $3.ca Robert Bek.715. either by way of traditional incumbents through IPTV offerings or over-the-top Internet offerings.. The company also has an extensive portfolio of media assets.176. Toronto.Lee@cibc.Institutional Equity Research Company Update January 17.1M $1. with current valuations well below historical levels. Given our confidence in Rogers' execution. Reuters. including potential conflicts of interest. 2011 Stock Rating: Telecommunications & Cable Services Sector Outperformer Sector Weighting: Rogers Communications Inc. Market Weight 12-18 mo. as there remains little need for capital in the medium term.

73 Company Profile Rogers is a diversified Canadian communications company.0 1.0 424.5 251.6% 38. leading to improving ARPU trends in future quarters.0% 2011E 12.8% 32.10 2011E 4.0 $76.8 3.309.2x 12.2 9. (RCI.98 2008A 4. Given the heightened focus on cost efficiencies and margin expansion.Bek@cibc.5% 55.0 2.4% Source: Thomson.760.6% 35.TSX) Sector Outperformer Robert Bek.3% 17.0% 2. 2011 Current Price : C$35.8% 2010E 12.0 167.1x 2011E 11.566.060.426.700.3x 17.002.8 671.2 1.495.415.478.8% 2.1x 2009A 8.300.150.0 4.0 Q3/10 8.2% -25.8% 4. internet broadband and telephony products.335.1x 6.Valuation Too Attractive.292.7x 2009A 14.0 1. TV and publishing) and owns the Toronto Blue Jays MLB franchise.04 2010E 4.January 17.090. Company reports and CIBC World Markets Inc.0 1.756.0 2.060.8 748.2% y/y Growth 6.7 1.0 1.6 2.0 4.8% 2.058.809.0 9.2 671. as well as a provider of cable television services.91 Rogers Communications Inc.7x 9.0 3.160.685.To 18.0 2.5% 3.7% 2008A 11.6 4.730.0 6. we believe Rogers will continue to deliver strong value to its shareholders.8% 35.6 3.250.2 1.9x 15.021.715.461.0 2.7% 5.79 1.4x 2010E 11.0 995.0 2.850.3x 7.0 1.0 1.0 125.4x 18.B .ca 2010E 6. CFA (416-594-7454) Bob.48 2009A 4.7 655.1x 25.ca Tony Rizzi (416-594-7299) Tony Rizzi@cibc. With current concerns over competition and AWS entrant risks overblown.2x 16.6 2.6% 2.Month Price Target: C$44.0 0.247.0 1.6 624.8% 13.5% 29.8% 9.3% 2.415.0 1.9% 15.56 2011E 6.ca Michael Lee.0% 38.0 3.0 228.1x 29.0 909.6x 6.0 1.0 3.0 575.0 1.0 104. and with the implementation of a sizeable share buyback program.15 12.0 502.0 575.046.9x 6.0x 27.0x 6. FD EPS Free Cash Flow EBITDA Less: Capex Cash Taxes Cash Interest Operating Free Cash Flow (FCF) Operating FCF Per Share 2008A 2008A 2008A 7.625.0 2. 84 .7 655.98 1. Chart 1: Revenues & EBITDA By Segment (2010E) 100% 75% 50% 25% 0% Revenues Wireless Cable 11.366.5% 3.6 1.779.0 647.8% 14.623.7% 67.Lee@cibc.9x 6. we expect both free cash flow and dividends to grow at a healthy clip.0 3.0 1.0 647.625.4% 2009A 11.2x 2010E 9.7 1.6x 16. CFA (416-594-7907) Michaelc.7 1.0 1. Rogers also has a broad portfolio of media assets (radio.5x 14.0 9.9x 19.719.715.855.0% EBITDA Media Key Operating Statistics (Last Reported Qtr.8x 5.756.0 4.7x 2011E 10.2x 6.29 2009A 6.0 1. Even With Wireless Concerns .597.157.0 3.035.21% 28.786.0 2.731.0 1.0 2.881.850.06% 22.7x 30.605. we believe the prospects of attracting higher value subs will continue to drive strong data adoption capable of moderating the effect of voice erosion.0x 18.0 $74.1% -2. engaged in wireless voice and data services.) Q3/09 Wireless ('000): Total Subs Postpaid Net Adds Postpaid ARPU Postpaid Churn Data % of Network Revenues Cable ('000): Basic Subs Digital Subs Internet Subs Telephony Subs Total RGUs 8.9% 1.0 6. providing an attractive entry point for investors looking to benefit from RCI's strong growth potential for both wireless and cable assets. Investment Thesis While there remains concern over the effects of industry pricing pressure on wireless ARPU.673.980. RCI shares are trading at a material discount to our NAV.4 9.00 All figures in millions except per share data EV / EBITDA Multiples Rogers Communications Shaw Communications Comcast Time Warner Cable P / E Multiples Rogers Communications Shaw Communications Comcast Time Warner Cable Key Financial Metrics Free Cash Flow Yield Payout Ratio Consolidated Capex Intensity Net Debt / EBITDA Tax Rate Income Statement Revenue OpEx EBITDA Depreciation & Amortization EBIT Interest Expense EBT Tax Expense (Recovery) Net Income Adj.747.

Bloomberg.January 17. 85 . Even With Wireless Concerns . 2011 Source: CIBC Trendspotting Matrix.Valuation Too Attractive.

investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Box 500.(C$0. Management will continue to focus on creating additional value with the development of the Mana underground.com and ResearchCentral.ca All figures in US dollars.3M Nil $465. Semafo benefits from a complementary portfolio of assets.300. increasing throughput to 6. Toronto. Canada M5J 2S8 (416) 594-7000 Kevin Chiew 1 (416) 594-7457 Kevin.O. firstcall. Reuters.000 $3. A feasibility study is scheduled for release Q1/11. As a result. Brookfield Place. The company has one of the highest leverages to gold.6x 11. Fofina and Fobiri.3x Stock Price Performance Cash Flow Per Share 2010 2011 2012 P/CF 2010 2011 2012 $0. It has also delivered on expansion plans at its Mana plant. www. unless otherwise stated.000 tpd (bedrock).semafo.0x 14.Institutional Equity Research Company Update January 17. with a 10% increase in gold price generating an approximately 23% increase in CFPS. where applicable. Overweight 12-18 mo. we believe management's French-Canadian background will remain an advantage for the company.42E $0. A healthy exploration program is being planned for 2011 and we expect ongoing exploration news flow will continue to be a positive catalyst for Semafo shares.11-C$14. CFA Barry Cooper 1 (416) 594-7106 1 (416) 956-6787 Cosmos.Chiu@cibc.ca Barry.92E 27.44 271.2x Source: Reuters Company Description Semafo Inc. Semafo currently operates three gold mines in Burkina Faso. Niger and Guinea. Operating in French West Africa. exploration activities at Mana yielded several new discoveries such as Wona SW.8M Nil / Nil December $1. See "Important Disclosures" section at the end of this report for important required disclosures. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. is a Canadian-based mining company with gold production and exploration activities in West Africa.80E $0. 161 Bay Street.com Cosmos Chiu.6M 269. with Phase III completed ahead of schedule and under budget.58E $0. EPS Gr.. Operational Consistency Combined With Growth Upside C$18. Rate (E) 52-week Range Shares Outstanding Float Avg.cibcwm. Investors should consider this report as only a single factor in making their investment decision.com .6M No Current 3-5-Yr. Price Target SMF-TSX (1/12/11) Key Indices: None NM C$4. 2011 Stock Rating: Precious Metals Sector Outperformer Sector Weighting: Semafo Inc.50 C$11.71 per Shr NM $19.989:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports.Cooper@cibc.083.Chiew@cibc. Daily Trading Vol. including potential conflicts of interest. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2010 ROE (E) LT Debt Preferred Common Equity Convertible Available Earnings Per Share 2010 2011 2012 P/E 2010 2011 2012 $0. CIBC World Markets Inc.5M Shrs 2.97E $1. In 2010.ca Find CIBC research on Bloomberg. P.7x 10.2x 12. Kona.23 Semafo has been a model of operational consistency. With growth upside at Mana and torque to higher gold prices at Samira Hill and Kiniero.11E 19. meeting production/cost expectations the past three years.

200 gold) Mining Assets Mana . (416) 956-6787 barry. 87 Cash Costs ($/oz) 5% 5% 5% 5% 90% 90% 80% 85% $565 $245 $156 $85 $137 $1. (416) 594-7457 kevin.0x CGA IAG GLW ARZ GAM NXG KGC FNV AGI GG ABX EGO AUY NEM CG (5%) MLL SMF CG $124 $41 $14 $7 $187 $54 $10 $44 $0.58 272 $147 $48 $13 $5 $214 $235 $19 $216 $0. Niger and Guinea.ca Tonnes Grade (g/t) Au Ounces Au 18.42 $0.92 1.8x 2.18 $0.5x 2. We believe Semafo is in a position to grow through acquisition in a West African region that remains highly fragmented.276 596 187 643 159 PRICE ASSUMPTIONS Gold Exchange Rate US$/oz US/CAD 2009A $974 $0.38 242 $132 $40 $13 $7 $192 $124 $11 $113 $0.G&A Other Expenses Total Ex penses Income Before Tax Income Taxes Net Income EPS CFPS Shares Outstanding 242 $463 $510 $241 Cash flo w multiples calculated at $ US1 700 go ld price fo r 201 estimates 2 15x ANV RGLD AEM CF Multiples 261 $462 $508 $316 280 $466 $526 $449 302 $454 $517 $514 13x NGD 10x 8x MFL 5x GSS 3x 0x 0. Price Target: C$18. Reclamation S.3x 1.OP Mana .8x 1.71 $0.31 $0.08 $0.5x 0.86 2.chiew@cibc.5x 1.569 33.95 2011E 2012E $1.362 $5.80 1.January 17.ca Kevin Chiew. based on $1.225 $0.88 2010E $1. Currently Semafo operates three gold mines in Burkina Faso.377 1. (416) 594-7106 cosmos.20 1.65 2.95 2010E 2011E $1. Stock Rating: Sector Outperformer Sector Weighting: Overweight 12-18 mo.770 2. is a Canadian-based mining company with gold production and exploration activities in West Africa.57 $0.90 $0.UG Samira Hill Kiniero Exploration Potential Subtotal Balance Sheet Cash LT Debt Reclamation Subtotal Net Asset Value Gold Output (000s oz) $500 2009A 2010E 2011E 2012E $1.0x 1.06 2.ca Barry Cooper. 2011 Precious Metals SEMAFO INC. except per share amounts.80 1.3x 2.745 8.Operational Consistency Combined With Growth Upside .00 $0. Company reports and CIBC World Markets Inc.11 272 NAV/sh Cash A djusted NA V multiples calculated using go ld price o f $ US1 200 per o unce and 5% disco unt rate except fo r CG that is disco unted at 1 due to additio nal risk 2% 2. except per share and indicated amounts) Production (000s ounces) Cash Operating Costs (US$/oz) Cash Costs (US$/oz) Revenues Expenses Operating Expenses D.23 Fiscal Year End December 31 COMPANY DESCRIPTION Semafo Inc.665 687 909 530 1.689 1.8x Cash Adjusted NAV Multiples PRODUCTION AND COSTS Production Mana Samira Hill Kiniero Total Cash Costs Mana Samira Hill Kiniero 2009A 2010E 2011E 2012E 2013E '000 oz '000 oz '000 oz US$/oz US$/oz US$/oz 154 57 32 $398 $724 $642 178 53 30 $399 $772 $690 190 56 35 $437 $761 $629 200 62 40 $442 $680 $593 245 62 40 $482 $606 $568 NET ASSET VALUE Discount Ownership (in US$ millions.188 $2.485 12.64 200 150 100 50 0 $450 $400 Total Cash Costs Source: Thomson.07 $0. RESERVES & RESOURCES (in thousands unless otherwise indicated) Mana (Burkina Faso) Proven & Probable Measured & Indicated Inferred Samira Hill (Niger) Proven & Probable Measured & Indicated Inferred Kiniero (Guinea) Proven & Probable Measured & Indicated Inferred 18x Cosmos Chiu.80 $0. With 100% of its revenue generated from gold and 100% of its production unhedged.592 9.02 Mana .97 272 NAV $157 $52 $13 $5 $226 $288 $38 $249 $0.600 $0.chiu@cibc.92 $1.201 18.50 SMF-TSX (1/12/11): C$11. INVESTMENT THESIS Semafo has successfully commissioned three mines in West Africa.38 400 350 300 250 $550 .95 2012E INCOME STATEMENT 2009A (in US$ millions.20 1. in addition to its expansion of Mana.01 3. Semafo has one of the highest lev erages to gold for both its cash flow and NAV.700 $0.D&A.437 11.50 $4.OP Mana .UG Samira Hill Kiniero 2013E $193 $19 $0 $174 $0.cooper@cibc.

2011 Source: CIBC Trendspotting. 88 .January 17. Bloomberg.Operational Consistency Combined With Growth Upside .

We believe investor interest in oil sands continues to increase and that Suncor will re-emerge as a "go-to" oil sands investment.50 $37.. EPS Gr.43E $2. where applicable.337.92E 15.0M 1.562.com Andrew Potter.ca All figures in Canadian dollars. Suncor Is Still King Of The Oil Sands Market Weight 12-18 mo. the stock should be a strong performer. Canada M5J 2S8 (416) 594-7000 Kyle Balaux 1 (403) 216-3401 Kyle.40 / 1.573. including potential conflicts of interest. 2009 2010 2011 P/E 2009 2010 2011 $0. Daily Trading Vol. Suncor should be able to deliver this growth while generating $1 billion-$4 billion per year of free cash flow.ca Find CIBC research on Bloomberg.105. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. CFA Nick Lupick 1 (403) 221-5700 1 (403) 221-5049 Andrew. CIBC World Markets does and seeks to do business with companies covered in its research reports. P.cibcwm. Brookfield Place.O. See "Important Disclosures" section at the end of this report for important required disclosures.com . We believe that as Suncor continues to demonstrate improved reliability. As a result. unless otherwise stated.527 $59.com and ResearchCentral. Rate (E) 52-week Range Shares Outstanding Float Avg. Investors should consider this report as only a single factor in making their investment decision.45 1. Toronto. Market Capitalization Dividend/Div Yield Fiscal Year Ends Net Asset Value 2011 ROE (E) Net Debt Preferred Common Equity Convertible Available Earnings per Share We consider Suncor Energy to be a relatively low-risk oil sands investment given the high contribution of on-stream assets.0M Shrs 5. Reuters. Suncor remains the king of the oil sands. NYSE NM $29.19 per Shr 9.000 Bbls/d of oil sands capacity that it will continue to grow through 2015.270. 161 Bay Street. Box 500.0% $8. respectively – its closest peers.18E 62. Furthermore.ca Nick. 2011 Stock Rating: Oil & Gas .8x 26. Suncor is trading at only 80% of our risked NAV estimate versus 92% for the Integrated group average and 91% and 107% for CVE and IMO.6x 7. We expect Suncor to deliver over a 7% CAGR through 2016 as growth in oil sands of 12% per year more than trumps other declines.3x 17. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.Institutional Equity Research Company Update January 17.6M $0.60A $1.7x Source: Reuters Company Description Suncor is an integrated oil company approximately 85% levered to oil.37A $3. firstcall.318.91-$39.9x 9.3x Stock Price Performance Cash Flow per Share 2009 2010 2011 P/CF 2009 2010 2011 $2. Price Target SU-TSX (1/12/11) Key Indices: Toronto.Potter@cibc.1% December $47. CIBC World Markets Inc. Suncor has 392.suncor.Large Cap Sector Outperformer Sector Weighting: Suncor Energy Inc. With defined growth through 2020 and another 15 billion barrels to develop beyond that. its strong balance sheet and the outlook for significant free cash generation – all while the company continues to increase oil sands output. www.91E $4. There are no major shareholders.Balaux@cibc.0M Nil $37.0M No Current $47.Lupick@cibc.68 3-5-Yr.

Potter@cibc.116 $350 $4.35 US$9.585 35.071 575 14% 57% 366 2% 312 2011E $4. CFA Ph: (403) 221-5700 E-mail: Andrew.% Free Cash Flow Debt Analysis Net Debt .255 $1.mm Average Trading Volume (50 Day) Annual Dividend / Yield 2010E $37.954 ($283) $16.511 Total Unrisked NAVPS .874 849 9% 72% 540 7% 460 2016E $10.4x 7.ca Net Asset Valuation .55 $67.99 US$8.2009 Total Risked Asset Value $77.423 $7.282 408.January 17.234 564 15% 56% 359 306 2010E $4.575 0.800 52.288 $6.000 38.18 $5.800 57.22 US$6.02 $75.000 706.318 1.442 $4.07 $74.390 358.85 US$9.000 34.50 US$9.951 $308 $3. NYD) Current Price: $37.720 $7.972 556.000 59.2x 8.% Production Per Share (Boe/d per MM FD) . Ph: (403) 216-3401 E-mail: Kyle.500 295.573 $59.2x 6.513 ($277) $14.211 482.00 $94.141 $8.9x 6.000 52.$mm Net Debt/Cash Flow Net Debt/EV Valuation EV / DACF Target EV / DACF P/EPS Target P / EPS Source: Company reports and CIBC World Markets Inc.Debt Adjsuted Financial Statistics .498 ($272) $14.429 $4.337.560 $3.546 $11.0x 2015E 4.7x 14. (SU-TSX. 2011 Suncor Energy Inc.03 $8.167 $3.500 59. 2010E US$61.728 $7.868 76% $2.00 $89.059 774.75 $4.68 Price Target: $47.342 $1.527 $0.97 2013E 365 90 455 5.97 2015E 350 100 450 5.7x 2015E US$95.1x 2013E 5.125 59.22 US$6.456 $2.30 US$4.27 $8.200 40.4x 11.119 45.097 $1.224 $1.569 68.3x 2014E US$95.177 486.850 566.627 Total Risked NAVPS .23 US$5.800 62.313 283.1x 9.1x 10.151 $393 $3.25 $4.40 / 1.00 $0.Lupick@cibc.40 US$4.Suncor Is Still King Of The Oil Sands .88 2010E 429 64 493 6.692 2011E $8.00 $0.073 502. Ph: (403) 221-5049 E-mail: Nick.7x 2012E US$85.469 $1.382 $4.00 $5.800 64.91 $2.37 $3.881 59% $2.bbl/d Oil Sands Production .9x 13.000 39.900 623.087 62% $5.02 $75.5x 11.922 88% $1.028 717.99 $66.000 42.00 $5.257 53.12 $69.3x 0.00 $94.42 $58.00 $94.00 $0.054 ($256) $9.50 US$9.075 69% $3.267 $10.00 $84.112 $3.bbl/d Libya Oil Production .$M Float .159 $1.22 US$6.562 5.270 ($261) $12.43 $3.97 2014E 358 100 458 5.bbl/d Synthetic Crude Oilsands Production .875 59.00 $0.5x 2013E US$90.1x 2011E US$79.800 65.94 $3.boe/d East Coast Oil Production .1x 0.1% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .000 42.1% Sector Outperformer Analyst: Andrew Potter.5x 0.bbl/d North Sea Oil Production .800 50.053 2016E ($4.97 2012E 372 90 462 5.989 $361 $4.ca Kyle Balaux.97 2011E 380 90 470 5.1x 2012E 6.976 700 11% 64% 445 9% 379 2013E $7.51 $77.ca Nick Lupick.30 $7.044 50.256 $69.86 $8.754 $361 $4.9% $53.318 $10.$M Net Debt .3x 33.201 792 9% 69% 504 1% 429 2015E $8.0x 0.0x 2014E 5.7x 9.69 $8.8x 0.67 $0.758 783 10% 68% 498 12% 424 2014E $8.786 2013E $5.874 $11.779 $4.256 1.6x 0.bbl/d Oil & Liquids (bbl/d) Production .92 $3.1x 90 .02 $75.00 $0.0x 17.340 0.109) nm nm 2016E 4.129 $6.41 $6.679 2010E $10.5x 21.484 ($266) $13.MBoe/d Natural Gas % Oil Sands % Production Per Share (Boe/d per MM FD) Production Growth Per Share .99 US$9.736 0.365 643 12% 62% 409 12% 349 2012E $6.80 P/NAVPS (Unrisked) 70% Target P/NAVPS (UnRisked) 88% CIBC Deck NYMEX WTI (US$/Bbl) Edmonton Par (C$/Bbl) Western Canadian Select (C$/Bbl) NYMEX Gas (US$/Mcf) AECO (C$/Mcf) CRCK321 (US$/Bbl) FX (US$/C$) Operating Statistics Western Canada Natural Gas Production .678 $11.$mm (except per share values) Oil Sands EBITDA Natural Gas EBITDA East Coast & International EBITDA Downstream EBITDA Corporate EBITDA Total EBITDA Total Company Operating Cash Flow CFPS (Diluted) Operating Income Operating EPS (Diluted) Net Capex Net Capex/Cash Flow .9% $47.875 59.22 $6.mmcf/d Natural Gas (MMcf/d) Western Canada Oil & Liquids Production .985 $332 $4.7x 11.2x 10.764 $1.40 $5.860 2014E $3.00 $5.50 US$9.523 1.724 $7.mmcf/d Syria Natural Gas Production .552 40.650 62.Balaux@cibc.645 2015E $320 0.68 1.8x 2016E US$95.19 P/NAVPS (Risked) 80% 101% Target P/NAVPS (Risked) Total Unrisked Asset Value $88.141 ($413) $8.1x 2010E 10.860 497.23 $0.50 Target Return: 26.751 $373 $4.$mm Enterprise Value .2x 26.426 $1.906 50.198 $13.97 2016E 343 100 443 4.4x 9.1x 2011E 8.1x 5.41 $6.5x 6.638 76% $2.509 58.207 2012E $7.087 65% $2.9x 12.300 35.61 US$3.07 $8.

Bloomberg.January 17. 2011 Source: CIBC Trendspotting Matrix.Suncor Is Still King Of The Oil Sands . 91 .

37 878.0M No Current 3-5-Yr.S. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2011 ROE (E) LT Debt Preferred Common Equity Convertible Available Earnings Per Share 2010 2011 2012 P/E 2010 2011 2012 Cash EPS excluding one-time items.com and ResearchCentral. We rate TD SO. Daily Trading Vol.000 $65. As a result. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. it trades at a 21% discount to its peers.Rizvanovic@cibc.O. Price Target TD-TSX (1/12/11) Key Indices: TSXFinSv 10.S. firstcall.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. 161 Bay Street. The purchase complements TD's existing U. Valuation also supports a positive view on the shares. Market Weight 12-18 mo.Sedran@cibc.4x Stock Price Performance Source: Reuters Company Description TD Bank is one of Canada's leading financial institutions.ca All figures in Canadian dollars. Reuters. EPS Gr.3 billion acquisition of auto lender Chrysler Financial. Our top pick in the sector is TD Bank.7x 10.Grauman@cibc. CFA (416) 594-7283 Mike. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.36E $7. CIBC World Markets Inc.com .44 / 3.506. deposit base.00M $38.908.5M 878.5M Shrs 2. See "Important Disclosures" section at the end of this report for important required disclosures. TD trades at a 2% premium on F11 earnings relative to peers compared with an 8% pre-crisis 10-yr average premium.8% $12. Given its strategic potential and tolerable financial implications.ca Find CIBC research on Bloomberg. P.25-$77.121. Investors should consider this report as only a single factor in making their investment decision. $5.0M $3. including potential conflicts of interest.cibcwm.184. While TD left its dividend unchanged in Q4/F10.394.00 $74. TD's payout ratio currently falls in the middle of its target range (based on our F2011 estimates). On a P/B basis. unless otherwise stated. platform by creating a vehicle to deploy its large U.29 per Shr 13. 2011 Stock Rating: Banks Sector Outperformer Sector Weighting: Toronto-Dominion Bank Revenue Growth To Drive Outperformance In F2011 $84.S.7M $2. implying an increase could be feasible in the near term. CFA 1 (416) 594-7874 Robert.0% $61. as we expect strength from its Canadian and U. retail franchises will help drive outperformance in F2011.3% October $44.20 In what is expected to remain a challenging economic environment. and offers a full array of financial products and services to over 18 million customers worldwide..ca Robert Sedran. Canada M5J 2S8 (416) 594-7000 Meny Grauman. Box 500. we view the deal favorably. we believe revenue growth will be a key success factor for the Canadian banks. TD recently announced the US$6. compared with a historical average discount of 5%. CFA 1 (416) 956-3723 Meny. management noted it will be providing guidance on the dividend in the upcoming quarter. Brookfield Place.Institutional Equity Research Company Update January 17. Rate (E) 52-week Range Shares Outstanding Float Avg.9x 11. Mehmed Rizvanovic. www. Toronto.tdbank.14E 12.77A $6. where applicable.

2% 3.287 1.6% 4.808 5.20 12.456 677 2.3% 9.7x 2.750 91. CFA (416-594-3723) Meny.612 7. SEGMENTED EARNINGS CONTRIBUTION 120% 100% 80% 60% 40% 20% 0% -20% F2008A Canadian P&C Banking 57% 51% 59% 19% 11% 18% 21% 23% 12% 20% 19% 12% 22% 17% 12% F2010A $5.254 23.4% 3.1x F2009A $5.ca F2011E 11.320 (22%) 12.442 F2009A Wealth Management F2010A Wholesale Banking Q4-10 Corporate U.063 (5.3% 189.6x Q4-10 1.2% 11.946 265.311 558 2.January 17.4% 58.50 1. 2011 Toronto-Dominion Bank (TD-TSX) Current Price: C$74.072 272. CFA (416-594-7283) Mike. CFA (416-594-7874) Robert.0% 215.46% F2012E $7.14 12.7%) 1.Rizvanovic@cibc.329 7.509 87. one-time items) KEY MULTIPLES F2009A F2010A P/E Multiple 13.685 (16%) 12.1% 13.39% 61% Gross impaired loans Specific ACLs Total ACLs Classical Coverage ratio Specific ACLs to GILs General ACLs as % of Gross Loans & BAs KEY EARNINGS DRIVERS Core net interest income % change Total capital markets related revenue % change Provision for credit losses % change Non-interest expenses % change (3) -6% -8% -10% -13% 114% 24% 0.2% 2.496 9.4% 3.00 All Figures in $ millions.3% F2009A 0.639 (2) OUR THESIS Our positive bias on this name has been based on our belief that the combination of its strong personal and commercial banking businesses – on both sides of the border – should position it well relative to its peers in a slower growing environment.7x 11.Sedran@cibc.3% F2009A 11. 60% Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Source: Company reports and CIBC World Markets Inc.738 318.Grauman@cibc.6% 3.910 F2010A 71.5x 12.3% F2012E 0.932 309.4% 3.757 280.410 121.ca Mike Rizvanovic.587 75% 20% 0.68% F2010A 10.159 F2012E 79. Performance in the most recent quarter supports our thesis with solid revenue growth in most businesses and the fact that unusually high expenses should settle down in the coming quarters.669 18.36 10. P&C Banking F2011E 11.8% 4.086 F2011E $6.77 4.4x 10.322 255. (3) Ex cludes gains/(losses) on inv estment securities.8% 12.665 102.699 3.9% F2011E 12.8% 59.0% 1.833 88.To 18-Month Price Target: C$84.7% 199.63% Q4-10 3.9x Peer average P/BVPS Peer average OPERATING PERFORMANCE Core cash EPS Annual EPS growth Core cash ROE Efficiency ratio Operating leverage (YoY) CREDIT METRICS Loan loss rate (1) Sector Outperformer Robert Sedran.701 FORWARD P/E MULTIPLE RELATIVE TO PEER GROUP (based on consensus estimates) 150% 10-y ear Av erage Relativ e Fw d P/E: 101% 130% Current Relativ e Fw d P/E: 102% 110% 90% CAPITAL MEASURES Tier 1 capital ratio Tangible common equity to RWA Tangible common equity to tangible assets Risk Weighted Assets LOAN BOOK Residential mortgages Personal and credit cards Business and government Gross Loans Acceptances Total Gross Loans & Acceptances 70% Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Current Relativ e P/E Plus 1 Standard Dev iation 6-month Mov ing Av erage Minus 1 standard Dev iation P/BVPS MULTIPLE RELATIVE TO PEER GROUP 160% 10-y ear Av erage Relativ e P/B = 95% 140% 120% 100% 80% Current Relativ e P/B = 79% Notes: (1) PCLs as a % of av erage net loans and acceptances (ex cl.585 F2009A 65.781 100. (2) Total ACLs as a % of GILs.8% 1. except per share data (excl.3%) 1.5% ) F2010A 0.6% 2.3% F2010A 12.7% 61.5% 13.016 93% 11.249 129.270 F2012E 12.507 109.416 6.3% F2012E 13.ca Meny Grauman.1% 9.3% (1.1% F2011E 0.78% F2009A 10.168 F2011E 74. 93 .9% 13.248 (15. TD remains rated Sector Outperformer.200 (9%) 12.857 94.3% 229.8% 11.Revenue Growth To Drive Outperformance In F2011 .7% 60.83% F2009A 2. repos).155 3.S.962 8.3% 14.233 299.037 8.6x F2012E 10.056 3.770 291.9% 3.

January 17.Revenue Growth To Drive Outperformance In F2011 . Bloomberg. 2011 Source: CIBC Trendspotting Matrix. 94 .

2011 Technical Analysis Disclaimer – For security-specific analysis: The opinions expressed in the technical analysis sections of this report are based upon a methodology that examines the past trading patterns and trends of a security for various technical indicators in an effort to forecast future price movements. are not intended to serve as precise “fundamental price targets” and should not be relied upon as such. the opinions expressed herein.January 17. recommendations and price targets based upon a “fundamental” analysis of their businesses. and are not responsible for errors or omissions. The technical analyst may not file updates in the event that the facts. We make no guarantees as to the accuracy. representative to request copies of relevant equity research reports published by fundamental analysts for further information. may engage in trading strategies or hold positions in the security(ies) discussed in this report and may abandon such trading strategies or unwind such positions at any time without notice. Investors should not expect continuing analysis or additional reports from the technical analyst relating to the securities discussed in this report. trends or opinions expressed in this report change. However. The comments and views expressed in the technical analysis sections are those of the technical analyst.Top Picks Of 2011 . price resistance and/or support. CIBC World Markets Inc. CIBC World Markets Inc. We recommend that clients contact their CIBC World Markets Inc. Technical analysis is one of many analytical tools that may be useful in making an informed investment decision. The issuers or securities discussed in these sections are not continuously followed by the technical analyst. thoroughness or quality of the information presented. may also publish research reports on the issuers discussed herein that may communicate different or contradictory opinions. 95 . including technical levels of trading trends.

Top Picks Of 2011 .January 17. 2011 96 .

January 17.Top Picks Of 2011 . 2011 97 .

as well as more specific disclosures set forth below. director or advisory board member of a company that such analyst covers. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. related to the specific recommendations or views expressed by such research analyst in this report.Top Picks Of 2011 . or will be. Additionally. Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets are compensated from revenues generated by various CIBC World Markets businesses. futures or other derivative instruments based thereon. 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. related securities or in options. CIBC World Markets generally prohibits any research analyst from serving as an officer. may at times give rise to potential conflicts of interest. is. or at the beginning of any subsection hereof. 98 . Recipients of this report are advised that any or all of the foregoing arrangements.January 17. including the CIBC World Markets Investment Banking Department. 2011 IMPORTANT DISCLOSURES: Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research report. directly or indirectly. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report. 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. 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.

13) (EMP. C$42. 2g. C$12. Sector Performer) Kirkland Lake Gold Inc.12.22. 9) (CNR-TSX. (AGI-TSX. C$28. 2g.75. 2f. 2c. 4b. 2g) (BOX. C$42. C$6. US$24. (2g) (KGI-TSX.69. Sector Outperformer) EnCana Corporation (2g. 2f. Sector Outperformer) CAE Inc.January 17. US$47. C$53. Sector Outperformer) Gold Wheaton Gold Corp. Sector Underperformer) CGA Mining Limited (2g. 2011 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc. C$16. 2e.59. 7. 12) (PJC. (2g. C$9. C$4. Sector Outperformer) Baytex Energy Corp. (2g. C$20.42. Sector Outperformer) Celestica Inc. Sector Performer) Bonterra Energy Corp.19.38. 2e. (2a. C$8. 2c.99. C$25. (2g. (2a. (2g. Sector Outperformer) Hecla Mining Company (2g) (HL-NYSE. 7. US$5. C$21. 7. (2g) (GSS-AMEX. 3c. 7) (ERF-TSX. 12) (BBD. 7) (HR. US$24. 2e. Sector Outperformer) Gammon Gold Inc. 2g) (FVI-TSX. 2e. (GLW-TSX. Sector Outperformer) Cenovus Energy Inc. Sector Outperformer) Allied Nevada Gold Corp. 2g.A-TSX. C$12.42. Sector Performer) Brookfield Office Properties Canada REIT (2a. US$9. US$69. 2e.B-TSX. 2c. C$32. 2c. 7. 7) (CPG-TSX.86. 9) (CVE-TSX. C$68.08. 7. 2g) (EDR-TSX. C$2. 7) (ABX-NYSE. US$3.02. Sector Performer) Aurizon Mines Ltd. 2g. C$21. US$9. 2d. (2g) (ANV-AMEX. Sector Performer) Black Diamond Group Limited (2g) (BDI-TSX. 2g) (CSH. 2c. C$5. 7) (GG-NYSE.17. (2a. Sector Performer) H&R REIT (2a.14. 7) (FNV-TSX. US$40. Sector Outperformer) ARC Resources Ltd. Sector Outperformer) Bonavista Energy Corporation (2a. Sector Outperformer) Daylight Energy Ltd.45. (2a. US$17.68.Top Picks Of 2011 .84.UN-TSX. 2c. Sector Outperformer) Chartwell Seniors Housing REIT (2a. Sector Performer) Crescent Point Energy Corp. 7) (AEM-NYSE.51. Sector Outperformer) Endeavour Silver Corp.97. C$17. Sector Underperformer) IAMGOLD Corporation (2g) (IAG-NYSE. C$30. 2c.05. C$6. 2c. 2e. US$17. (2g) (CDE-NYSE. 2e.90. US$16. Sector Outperformer) Agnico-Eagle Mines Limited (2f. Sector Outperformer) Eldorado Gold Corporation (2g) (EGO-NYSE. C$7.UN-TSX. Sector Outperformer) Canadian Pacific Railway Ltd. Sector Outperformer) Fortuna Silver Mines Inc. 2e.14. Sector Performer) Enerplus Corporation (2g. 2e. (2g) (ARZ-TSX.87. 2g. 7) (BNP-TSX.85. 7) (CGA-TSX. 2g. C$6.27. C$9.72. Sector Performer) First Majestic Silver Corp.23. C$27.05. C$32.66. 7.80. C$48. Sector Outperformer) Angle Energy Inc. Sector Performer) Centerra Gold Inc. 4a. 3c. (2g) (CG-TSX. Sector Outperformer) Franco-Nevada Corporation (2g. Sector Outperformer) Golden Star Resources Ltd. Sector Performer) Goldcorp Inc.24. Sector Outperformer) Barrick Gold Corporation (2f. 2g) (NGL-TSX. C$4. 2g. Sector Outperformer) Imperial Oil Limited (2g) (IMO-TSX. Sector Outperformer) C&C Energia Ltd. Sector Outperformer) Bombardier Inc. (2g. (FM-TSX. Sector Performer) Alamos Gold Inc. 4a. 2e. US$31. Sector Outperformer) Canadian National Railway Co. Sector Underperformer) Jean Coutu Group (PJC) Inc. Sector Outperformer) Empire Company Limited (2g.07.88. 3a.58. (2a.43. 2c. 9) (CP-TSX. C$7. 2e. Sector Outperformer) 99 .A-TSX.23. 2e. Sector Underperformer) Genworth MI Canada Inc.26. 4b. C$52.04.: Stock Prices as of 01/17/2011: 5N Plus. 7) (MIC-TSX.67.UN-TSX. (2a.30. (2a.64. 2g. C$66. (2g) (BTE-TSX. 2g) (DAY-TSX. Sector Performer) First Quantum Minerals Ltd. 7) (ARX-TSX. (2a.77. Incorporated (2g) (VNP-TSX. 3a. (2a. 2c. 12) (CLS-NYSE. Sector Outperformer) Kinross Gold Corporation (2g) (KGC-NYSE. C$119. (2g) (FR-TSX. (2g) (BNE-TSX.21.92. C$14. (2g) (CZE-TSX. 9) (CGT-NYSE. 7. 2e. Sector Outperformer) Coeur d'Alene Mines Corp. 7. 9) (ECA-NYSE.53. (2g. (2g) (GAM-TSX. 6a.27.

Inc.15. Sector Outperformer) Pengrowth Energy Corporation (2g.70. C$61. Not Rated) Spirit AeroSystems. US$140. 7. 2g. 2g) (PMT-TSX. 2e.95.70. 2e.B-TSX. Sector Underperformer) PetroBakken Energy Ltd. (2a. 7) (TD-TSX. 2g) (PRQ-TSX. Sector Outperformer) Royal Gold. (2g) (MN-TSX.B-TSX.20. Sector Performer) TD Bank (2a.00.23. 9) (SU-TSX. Sector Outperformer) Pan American Silver Corp.78. US$66. 3a. (2a. Sector Outperformer) Teck Resources Limited (2a. (PWT-TSX. C$13. 3a. 2e. 2e. Sector Outperformer) Quadra FNX Mining Ltd. 2c. (2g) (PMG-TSX. Inc. (2a.39. 2c. 2e. (2a. 7) (VET-TSX. Sector Performer) Suncor Energy Inc.Top Picks Of 2011 . Sector Outperformer) New Gold Inc. C$4. C$32. Sector Outperformer) Silvercorp Metals Inc.52. (2g. 9. 2g) (AUY-NYSE.10. 2e. (2g. Sector Outperformer) NAL Energy Corporation (2a. Not Rated) 100 . (2a. Sector Outperformer) Shoppers Drug Mart Corporation (2g) (SC-TSX.B-TSX. 2g) (SMF-TSX. Sector Outperformer) Medusa Mining Limited (2g) (MLL-TSX.39. C$17. C$38. 3c. (2g) (NGD-TSX. 2f. 2g) (QUX-TSX. 3a. US$22. 3c. US$35.89. (2g) (TET-TSX. C$13. 2g) (NAE-TSX. 2c.64.30. Sector Performer) Northgate Minerals Corporation (2a. Not Rated) First Solar. 2e. 2g) (SSRI-NASDAQ. (2a. 3a. 7.72. C$5. 2e. C$4. (2a.: Stock Prices as of 01/17/2011: Comcast (CMCSA-NASDAQ. Inc. 2g. 2g) (NXG-AMEX.30. 2011 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.72. 2g) (PEY-TSX. C$12. Sector Underperformer) Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc. 2d.01.81. 3c. US$47. 7) (PGF-TSX. Sector Outperformer) Total Energy Services (2g) (TOT-TSX. 2g) (PAAS-NASDAQ.98. C$13. Sector Outperformer) Taseko Mines Limited (2g) (TKO-TSX. Sector Outperformer) Shaw Communications Inc. (FSLR-NASDAQ.99. 3a.20. C$18.January 17. 3a. Sector Outperformer) Onex Corporation (2g.35. Not Rated) Skilled Healthcare Group Inc. Sector Underperformer) Silver Wheaton Corp. 2g. 7. 2e. 12) (OCX-TSX. 2c. 12) (TCK. (2a.50. 2b. 3b) (NEM-NYSE.07.08.07. 2e. 2c. Sector Performer) Silver Standard Resources Inc. Sector Performer) Newmont Mining Corporation (2g. C$39. Sector Outperformer) Petrominerales Ltd.10. 2d. (2g) (PRE-TSX. C$37. (2a. 2e. C$32. US$55. US$2. Sector Outperformer) Perpetual Energy Inc. C$25. Sector Outperformer) Pacific Rubiales Energy Corp. C$45. C$10. US$11. C$21. 3c.07. Not Rated) Emergency Medical Services Corporation (EMS-NYSE. 2c.00. 2g) (RGLD-NASDAQ. (SKH-NYSE. US$11. 2c. 2e. (2g) (PBN-TSX. 2g. US$23. (2a. US$31. Sector Performer) Vermilion Energy Inc. C$76. Sector Performer) Trilogy Energy Corp. (SPR-NYSE. C$35. 2e. 2c. Sector Performer) Yamana Gold Inc. 2c. Sector Outperformer) Peyto Exploration & Development Corp. C$10.44. (2a.90.06. 13) (SJR. C$13. 2c.84. (2g) (SLW-NYSE. 2e. 2c.19. C$8.: (Continued) Stock Prices as of 01/17/2011: March Networks Corp. Sector Performer) Progress Energy Resources Corp. (2a. 2e. 2c. 2c. Sector Performer) Penn West Petroleum Ltd. C$20. 2g) (SVM-TSX.96. Sector Performer) Semafo Inc.73. 13) (RCI. 2f. 2e. Sector Outperformer) Rogers Communications Inc. US$23. 3c. C$7.

Not Rated) 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.January 17. US$65.61. C$37.15. Not Rated) TransCanada Corp. 2011 Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc. 101 .: (Continued) Stock Prices as of 01/17/2011: Time Warner Cable (TWC-NYSE.Top Picks Of 2011 . (TRP-TSX.

The equity securities of this company are non-voting shares. An executive of CIBC World Markets Inc. The equity securities of this company are limited voting shares. has received compensation for investment banking services from this company in the past 12 months. has received compensation for non-investment banking. CIBC World Markets Inc.. non-securities-related services in the past 12 months. CIBC World Markets Inc.January 17. and CIBC World Markets Corp. Canadian Imperial Bank of Commerce ("CIBC"). and CIBC World Markets Corp. CIBC World Markets Corp. CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. CIBC World Markets Corp. CIBC World Markets Inc. has received compensation for non-investment banking. 10 11 12 13 14 102 . securities-related services in the past 12 months.Top Picks Of 2011 . The CIBC World Markets Corp. securities-related services from this company in the past 12 months. CIBC World Markets Corp. has managed or co-managed a public offering of securities for this company in the past 12 months. has received compensation for non-investment banking. has received compensation for non-investment banking. CIBC World Markets Corp. analyst(s) who covers this company also has a long position in its common equity securities. 2011 Key to Important Disclosure Footnotes: 1 2a 2b 2c 2d 2e 2f 2g 3a 3b 3c 4a 4b 4c 5a 5b 6a 6b 7 8 9 CIBC World Markets Corp. This company is a client for which a CIBC World Markets company has performed non-investment banking. has received compensation for investment banking services from this company in the past 12 months. CIBC World Markets Inc. or a member of his/her household is an officer. A member of the household of a CIBC World Markets Corp. CIBC World Markets Corp. A senior executive member or director of Canadian Imperial Bank of Commerce ("CIBC").. fundamental analyst(s) who covers this company also has a long position in its common equity securities. The equity securities of this company are restricted voting shares. the parent company to CIBC World Markets Inc. fundamental research analyst who covers this company has a long position in the common equity securities of this company. the parent company to CIBC World Markets Inc. research analyst who covers this company has a long position in the common equity securities of this company. or any analyst involved in the preparation of this research report has provided services to this company for remuneration in the past 12 months. This company is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months. The equity securities of this company are subordinate voting shares. This company is a client for which a CIBC World Markets company has performed non-investment banking. The CIBC World Markets Inc. CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. non-securities-related services from this company in the past 12 months. has managed or co-managed a public offering of securities for this company in the past 12 months. securities-related services from this company in the past 12 months. CIBC World Markets Corp. non-securities-related services from this company in the past 12 months. director or advisory board member of this company or one of its subsidiaries. beneficially own 1% or more of a class of equity securities issued by this company. makes a market in the securities of this company. has a significant credit relationship with this company. in the aggregate. A member of the household of a CIBC World Markets Inc... and their affiliates.

and the S&P/TSX Composite in Canada. ***Restricted due to a potential conflict of interest. Stock Rating System Abbreviation Stock Ratings SO SP SU NR R O M U NA Sector Outperformer Sector Performer Sector Underperformer Not Rated Restricted Overweight Market Weight Underweight None Stock is expected to outperform the sector during the next 12-18 months. CIBC World Markets Inc. Sector is expected to underperform the broader market averages.3% 2.7% 92.1% 9. Sector is expected to outperform the broader market averages. Coverage Universe (as of 17 Jan 2011) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 140 127 28 6 Percent 46. CIBC World Markets Inc. 4th Floor. our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at http://researchcentral. 2011 CIBC World Markets Inc. Ontario M5J 2S8. 161 Bay Street. Price Chart For price and performance information charts required under NYSE and NASD rules. do not correlate to buy. Important disclosures required by IIROC Rule 3400..4% 93. hold and sell recommendations. Rating Description Sector Weightings** **Broader market averages refer to the S&P 500 in the U. and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 135 119 26 6 Percent 96. Stock is expected to perform in line with the sector during the next 12-18 months.cibcwm.cibcwm.Top Picks Of 2011 .January 17. Stock is expected to underperform the sector during the next 12-18 months. 161 Bay Street.0% *Although the investment recommendations within the three-tiered. has assigned buy ratings to securities rated Sector Outperformer. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues.com/sec2711 or write to CIBC World Markets Inc. Toronto. Ontario M5J 2S8.. Attn: Research Disclosure Chart Request. including potential conflicts of interest information.9% 100. CIBC World Markets is restricted*** from rating the stock. relative stock rating system utilized by CIBC World Markets Inc. for the purposes of complying with NYSE and NASD rules. Sector rating is not applicable. CIBC World Markets does not maintain an investment recommendation on the stock.S. Brookfield Place. hold ratings to securities rated Sector Performer.4% 42. Sector is expected to equal the performance of the broader market averages. Toronto. Ratings Distribution*: CIBC World Markets Inc. 4th Floor. please visit CIBC on the web at http://apps. Attention: Research Disclosures Request.com under 'Quick Links' or by writing to CIBC World Markets Inc. Brookfield Place.0% Inv. 103 .

As with any investment having potential tax implications. This report may provide addresses of. All estimates. duplication or disclosure without the prior written permission of CIBC World Markets is prohibited by law and may result in prosecution. CIBC World Markets has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof.January 17. Each such address or hyperlink is provided solely for the recipient's convenience and information. and no representation or warranty. each is solely responsible for its contractual obligations and commitments. including the loss of investment principal. 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. 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. The analyst writing the report is not a person or company with actual. and (iv) will be subject to investment risks. (the Canadian broker-dealer) are required to effect transactions (other than negotiating their terms) in securities discussed in the report through CIBC World Markets Corp. The comments and views expressed in this document are meant for the general interests of wholesale clients of CIBC Australia Limited. 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"). © 2011 CIBC World Markets Inc. Such investors will not be able to enter into agreements or purchase products mentioned herein from CIBC World Markets plc. and investors may realize losses on investments in such securities.S. prior to acting on any of the recommendations herein. a member of the Australian Stock Exchange and regulated by the ASIC (collectively. for distribution only to U.S. CIBC World Markets Inc. for informational purposes only. CIBC Australia Limited. (b) in the United Kingdom. but CIBC World Markets does not represent that any such information. opinions and statistical data contained in this report were obtained or derived from sources believed to be reliable. except to the extent that liability may arise under specific statutes or regulations applicable to CIBC World Markets. 2011 Legal Disclaimer This report is issued and approved for distribution by (a) in Canada. CIBC World Markets will not treat non-client recipients as its clients solely by virtue of their receiving this report. Information.S. "CIBC World Markets") and (d) in the United States either by (i) CIBC World Markets Inc. This report is provided. Before making an investment decision with respect to any security recommended in this report. Although each company issuing this report is a wholly owned subsidiary of Canadian Imperial Bank of Commerce ("CIBC"). to institutional investor and retail clients of CIBC World Markets in Canada. The CIBC trademark is used under license. 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 the content of linked third-party web sites is not in any way incorporated into this document. All rights reserved. as a substitution for the exercise of independent judgment of the merits and risks of investments. or contain hyperlinks to. Past performance is not a guarantee of future results. the TSX Venture Exchange and CIPF. (iii) will not be endorsed or guaranteed by CIBC. a member of the Investment Industry Regulatory Organization of Canada (“IIROC”). the Canada Deposit Insurance Corporation or other similar deposit insurance. (the U. This document and any of the products and information contained herein are not intended for the use of private investors in the United Kingdom. accounting or tax advice. The securities mentioned in this report may not be suitable for all types of investors. MIIs receiving this report from CIBC World Markets Inc. a member of the Financial Industry Regulatory Authority (“FINRA”). This report does not take into account the investment objectives. Nothing in this report constitutes legal. U. clients should consult with their own independent tax adviser. Major Institutional Investors (“MII”) (as such term is defined in SEC Rule 15a-6) or (ii) CIBC World Markets Corp. the Toronto Stock Exchange. which is regulated by the Financial Services Authority ("FSA"). CIBC World Markets suggests that. distribution.. Since the levels and bases of taxation can change..Top Picks Of 2011 . including possible loss of the principal invested. the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs. 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. Internet web sites. (ii) will not be deposits or other obligations of CIBC. implied or apparent authority to act on behalf of any issuer mentioned in the report. and (c) in Australia. financial situation or specific needs of any particular client of CIBC World Markets. CIBC World Markets accepts no liability for any loss arising from the use of information contained in this report. and they should not be relied upon as such. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. express or implied. opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice. any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. broker-dealer). Canadian retail clients of CIBC World Markets contact one of our client advisers in your jurisdiction to discuss your particular circumstances. CIBC World Markets plc. 104 . 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). objectives and financial circumstances. Unauthorized use. is made regarding future performance of any security mentioned in this report.

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