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

2

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.

3

Franco-Nevada Corporation Genworth MI Canada Inc. While the economics team believes the Fed may act early in the year.70 $94. at just about 2.51% 32.15 11947 Drop Coverage Or Changed Rating 4/9/2010 7/21/2010 $61.20 $14.95% 4. as he downgraded the stock after a 33% gain through April 2010.28 $5.1% 20.2% 4.26 $27. still 150 basis points (bps) better than the Composite Index price return.35 $18.69 4.55 $25. economy for better job recovery in the back half of the year.2% 13.5% 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.92% Price On 12/31/10 $7.03 $4. none of the top picks benefitted from a big takeover premium that has been available in past years and something Jeff benefitted from with his pick in 2008.0% 8. SP rated). Suncor Energy Inc. Despite a more active M&A environment. (US$) Shaw Communications Inc. Avery Shenfeld outlines what he thinks is in store for the coming year.S. 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.17 $3.00 $21.17 $15.88 (9.9% 20.25 $18. was Jeff Fetterly’s pick of Total Energy Services (TOT–TSX. This is a three-peat for Jeff in delivering the top-returning stock (full-year return). Much of it is expected to be the same as 2010.59 $19. 4 .38 $15.3% 60.8%) 16. Exhibit 2.January 17.9% 6. it will not be aggressive and will likely revert to “stand-by” mode until the end of the year.58 $4. 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. Price On 1/11/2010 $6.6% – led by a slightly more confident consumer. Not Yet Heaven in Twenty Eleven.3% 106. but the recent efficiency push on the back of capital spending should position the U.75 $30.0%.4% 17.94 $9. although this year he didn’t recommend investors hold it for the full period.10 $41. 2011 The highest Sector Outperformer return achieved by our analyst team.71 $21.43 $4.82 $16. Incorporated BPO Properties Ltd.89 $35.16 $36. H&R REIT March Networks Corp.99 13443 Full-year Price Return 12. Canadian National Railway Company Eldorado Gold Corporation (US$) Empire Company Limited First Quantum Minerals Ltd.7% 23.05 $38.05 $47.65 $66. our total return for the portfolio of top picks drops to 14.0% 14.35 $38. If we use these returns (and pretend the investor simply put the cash raised from the sale under their pillow).00 $33. but with the U. held for the full year.0% 17.3% 1.Top Picks Of 2011 .57 $55.93 $25. In both cases.48 $58.5% 12.78% 4. Pan American Silver Corp. 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.25% 1/26/2010 11/3/2010 4/15/2010 12/1/2010 $35.4% (0.S. Average Price Return For Holding Through 12/31/10 TSX Composite Return Source: Bloomberg and CIBC World Markets Inc. This positioning should help to create an investment environment that continues to have more stability. Taseko Mines Limited Total Energy Services TransCanada Corp.0% 8.20%) 10.82 $108.19 $37. generating slightly better GDP growth than previously forecast.21 $21.47 $6. which generated a 106% price return for the full holding period. In his most recent economics piece.

we wish all of our clients a healthy and prosperous new year. Head of Equity Research 5 . our technical analyst.75 $78.A KGI NAE OCX PRE PAAS PWT PMG QUX RCI.B CZE CP CSH.75 $13. C&C Energia Ltd. 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 $42. Rogers Communications Inc. EnCana Corporation Jean Coutu Group (PJC) Inc. Suncor Energy Inc.Top Picks Of 2011 . Quentin Broad Managing Director. Canadian Pacific Railway Limited Chartwell Seniors Housing REIT Daylight Energy Ltd. Petrominerales Ltd.00 $15. 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. and unemployment rate suggest.25 $43. 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..00 $40. that Canada should fare better than our neighbors south of the border.00 $25. Quadra FNX Mining Ltd. Kirkland Lake Gold Inc.00 $11. On behalf of CIBC.00 Source: CIBC World Markets Inc.S.25 $24.50 $84.50 US$52.50 $9. 2011 The backdrop in Canada remains better than we foresee globally.00 $16. consumption growth. Pan American Silver Corp. to provide us with a macro view on where he expects the markets to go in 2011.B SMF SU TD Company 5N Plus. When we compare the outlooks for the economies of Canada and the U. Penn West Petroleum Ltd. 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 12.00 $18.00 $32.50 $44.To 18. Top Picks Of 2011 Ticker VNP NGL BDI BBD. the economic indicators like GDP growth. Incorporated Angle Energy Inc. 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. NAL Energy Corporation Onex Corporation Pacific Rubiales Energy Corp.50 $47. Semafo Inc. Black Diamond Group Limited Bombardier Inc. Head of Portfolio Strategy.UN DAY ECA PJC.January 17. in composite.50 US$36.50 $22. Exhibit 3. 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 $7.00 $9. We asked Peter Gibson.month Price Target $8.

to help underpin their recovery while trying to stabilize the debt crisis in Europe. quantitatively ease and can the U. economy is weak but should gain some momentum in 2011.800 1. 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. Toronto (416) 956-3250 We believe that by the end of 2011 the TSX will have recorded gains of approximately 11. CFA.44 1.S. rates is obvious – The question is simply one of how long can the U. Federal Reserve continues to rely on quantitative easing.S.33 88 1. the outlook for the global economy and. 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%. Most strategists would say the same for 2011.46 93-103 1. 2011E 14. The benefits which Canada enjoys as an exporter of commodities while benefiting from sustainably low U. So far it appears to be working.S. Relatively high structural unemployment in the U.S.S. real estate market have resulted in a U. begin to see self-sustaining economic growth in 2011 that resembles the early stages of recovery witnessed in 2004? 6 . Coordinated global growth is clearly a leading cause of persistently higher average oil prices. Presumably.00 Themes By traditional measures.5% with a dividend yield of over 2% for a total return of approximately 14% for the year.271 0. At the same time.272 0.S.3 3.03 13.S.97-1. 2011 Do You Believe In Magic? Peter Gibson.S.) C$/US$ Source: Bloomberg and CIBC World Markets Inc. Federal Reserve's successful administration of quantitative easing through 2011. Every year of economic growth is another year of growing global oil consumption.16 3. 2011 Forecasts Summary Recent Canada TSX T-Bills Bond Yields U.Top Picks Of 2011 . the longer that the U. and continued weakness in the U. The TSX should continue to outperform the S&P 500 as a result of continued growth in the emerging nations as the U.28 3. in particular.January 17. Exhibit 4. the U.8%. therefore. is on the path to recovery then the longer that BRIC nations will grow. Toronto (416) 594-7194 Jeff Evans. Unfortunately. recovery that is approximately one-third to one-half the rate of growth we would like to see. albeit at much faster rates.S.95 3.S. Exhibit 4 is a summary of our forecasts for 2011. S&P 500 T-Bills Bond Yields WTI Oil (US$/Bbl) Gold (US$/oz.34 1. combined with a dividend yield of approximately 1. North American equity markets. relies on the U.8% ceiling is the key to appreciating how long gold and oil prices and the TSX can likely rise.369 1.S.384 0.580 0.S.

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

and act as a growth tax rather than a cause of secular inflation at first. would probably be perceived as a greater risk for Europe.S. if bond yields rise too much then the risk of a panic in debt markets also exists. although even moderate tightening by the U. i. recession still exists.S. resulting in capital flow back into the U.S. the greater the likelihood that U. then the risk of another U. Exhibit 5 illustrates that the implied ceiling for bond yields has been falling steadily for many years.8% ceiling too quickly while the U. From time to time. 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..S. Eventually. economic growth gains momentum and that growth becomes self-sustaining. The irony being that this level of bond yields increases the likelihood of more quantitative easing. the U. the 10-year Treasury would naturally be at 4. our view is a little different.Top Picks Of 2011 .S. Should the Fed be forced to tighten because the bond yields reaches the 3.S. it is like trying to stop the water flowing from a garden hose by holding your thumb over the end. high oil prices should underscore the safe haven status of the U.1%. A sudden significant upward move in bond yields and. We would think that sustainably high oil prices actually contribute to weaker U.e. 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. At these levels and above. Treasury bond yield level represents the level of yields that causes the S&P 500 to appear significantly overvalued. This is the dilemma the Fed faces and it is the direct result of too much government and consumer debt. the 3. therefore. Implications At present.. On the one hand.January 17. Treasury market. given the sheer potential size of emerging economies. real estate prices. growth relative to their historical experience and contribute to holding bond yield in the desired rate (i. In fact.S. economy is still relatively weak. it is a race against time to see which nation is more energy efficient.S. 8 . perhaps.e. The longer that the Fed can do this.3% when.8% 10-year U. 2011 The Circular Irony Of Quantitative Easing.S.3%). the goal would be to hold bond yields at 3. can adapt faster. develop energy substitutes faster and withstand sustainably higher oil prices longer than others. desperately needs a faster rate of economic recovery and. 3%–3. they skyrocket. yet.S. however. Higher Oil Prices And Stable Bond Yields In a sense.

The first collapse occurred from 2000 until October 2002. To assess the ongoing potential for the U.S.8% 4 3 3.8% ceiling 4.S. corporate profitability is rising. 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. then we remain optimistic about the outlook for North American equities.S. stock market. The 10-year U. there have been two massive collapses in the U.Top Picks Of 2011 . yield curve maintains a steep positive slope. On both of these occasions. for now.5% and it is likely that quantitative easing has played a significant role in preventing yields from rising further.S.S.S. We believe that.8% ceiling and U. 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. 10-yr U.January 17. By contrast. 10-year U. this decline probably resulted from the fact that the Fed had tightened until the U. the Fed can continue to quantitatively ease and hold the 10-year U. the recovery in 2009 coincided with bond yields at the low end of our estimated range and forward ROE was recovering. the 10-year U.S.9%) 2002 ceiling 4. Both major market collapses were signaled by three critical observations. The Fed had restored a steep positive slope to the yield curve. 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. 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. 9 . Since the year 2000. Treasury bond yield below the critical 3.8% ceiling.S. S&P 500 profitability had started to decline. Treasury bond yield. yield curve became inverted (see Exhibit 7). has recently been as high as 3.S. this would imply.1 5.S. albeit manipulated by the Fed.S. equity market.0% Ultimate floor 1 S&P 500 Source: Bloomberg and CIBC World Markets Inc. Second. is at very high levels and the U. Treasuries was also at relatively low levels (see Exhibit 8). however.S. Third. The second collapse occurred during the housing crisis of 2007 and the banking crisis of 2008. based on the fact that the bid-to-cover ratio. First.0% Desired long term average 2 2.5% Excess debt floor 1997 ceiling 2000 ceiling 2003 ceiling (5. Treasury yield exceeded the then current bond yield ceiling. Treasury market demonstrated during the global banking crisis.2% ceiling 5 Bond Yield (%) 8 7 6 +57% -50% +94% -57% +85% 9 3. the bid-to-cover ratio for U. 2011 Exhibit 5. the first critical step demands that we check Exhibits 5 to 8.

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. Exhibit 7.5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: CIBC World Markets Inc.5 4 3.5 1 0.January 17. Exhibit 8. 2011 Exhibit 6.5 3 2. 10 ROE (%) .Top Picks Of 2011 .5 2 1. Bid-to-Cover Ratio 5 4. 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.

whereas other late-cycle crises do not. The U. then we would expect forecasting chaos.S. The 2007/2008 crisis. 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. Residential U. but. Could This Be 2004 Because We Are Recovering From Recession? Exhibit 9 further underscores the fine line that the Federal Reserve is walking. Cash S&P 500 U. Quantitative easing. At the same time that bond yields are a mere 50 bps from the ceiling.January 17. emerging economy growth. in turn. Virtually every forecast. economic recovery. impacts our outlook for the U. Usually after the late-cycle crises. If the Fed fails. U. we are trying to emerge from a recession. but we know full well that this view depends entirely on quantitative easing. 2011 Self-sustaining U. they all turn on QE 2. 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. residential and commercial real estate prices remain weak. in fact. therefore. Treasury bond yields below the critical 3. we are optimistic about the Fed’s chances of success in eventually establishing a self-sustaining U. The U. as in 2004. is directly impacted by the Fed’s ability to quantitatively ease and hold bond yields below the critical level.S. however. gold prices and the Canadian dollar.S. resulted in a very significant U. Exhibit 9. result in technical recessions. equity market began to recover in October 2002 from the recession witnessed during that period. oil prices. Fortunately.S.S. the market rebounds for about two years before higher rates lead to another recession.S. 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.8% level. Economic Recovery Still Depends On Quantitative Easing In fact. 3 and the bond yield ceiling. Commercial Source: Bloomberg and CIBC World Markets Inc. Given these facts.Top Picks Of 2011 . Cash And Real Estate) U. dollar and. typically. in reality.S.S.S.S. recession. 11 . quantitative easing is underpinned by a significant rally in the S&P 500.S. Economy (Equities. thereby holding 10-year U. at the present time.

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

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

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

dollar as a result of monetizing debt and debasing the U. to become an export-dependent country as a result of devaluing the dollar. therefore. High Correlation Between TSX And CRB Returns Source: Bloomberg and CIBC World Markets Inc. in general.S. for the world. Other Important Circular Implications Of Quantitative Easing Quantitative easing. it is a strategy that contributes to lower interest rates for export-dependent countries and. is likely to pursue this strategy for as long as it possibly can. dollar in the process. Cumulative Returns: US$ Trade Weighted.S. is intended to hold bond yields below the critical ceiling levels of 3. but. 2011 Exhibit 14.S.8% but it also contributes to the devaluation of the U.Top Picks Of 2011 . 15 . rather. This is likely to remain the case until countries like China face a serious threat from inflation.S.January 17. has a number of other important implications. Quantitative easing. The goal is not so much for the U. Gold (rebased) Trade-weighted USD (RHS) Exhibit 15. 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. for example.

S. has enormous implications for the average level of oil prices longer term and.Top Picks Of 2011 . perhaps. allow the U. for investing opportunities in Canada.January 17. these sectors are supercritical to the outlook for the TSX.S. 16 . In effect. Yet. Sustainably high oil prices. the U. higher oil prices create relatively more pressure for less energy efficient. The U. obviously. force its conversion to natural gas just as the British economy once converted from coal to oil dependence. therefore. dollar. high oil prices are a growth tax. ultimately..S. ironically. 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.S.S. therefore. In a sense. perhaps. Although the U. is to have the economic incentive to lessen its reliance on oil before the emerging economies become so large that oil prices are crippling. easy. to extend its quantitative easing strategy. case can help hold bond yields down. to pursue energy substitutes and. This would imply that aggressive. This has important long-term potentially crisis implications for China. thereby making the U. The sheer potential size of the Chinese and Indian economies.S. as well as how significant. monetary policy for China.S.S.S. can get away with more quantitative easing. it is also relatively more efficient in its use of oil in generating GDP growth. Dollar Devaluation In the short term. Sustainably high oil prices are crucial today if the U. U. and global recovery.S. which contributes to holding bond yields down at the same time. is the largest consumer of oil globally. economy. therefore. dollar devaluation also contributes to higher oil prices. Sustainably high oil prices also create economic incentive for the U. U.S. therefore. which is relatively more punitive for other nations than the U. a sustainably higher oil price places relatively more pressure on other economies and may. It comes full circle then. 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. In turn. quantitative easing tends to contribute to rapid growth in emerging economies and. easy.S.S. even inflationary growth in time. 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. monetary policy results in aggressive. Higher Oil Prices Curiously. emerging economies but it also represents a growth tax on the U. as long as it tries to maintain its currency peg to the U. Higher oil prices can increase the risk of chaos elsewhere. Therefore.S. are a cause and effect of quantitative easing. and in the U. more of a safe haven and simultaneously increasing the likelihood that the U. the opportunity is for continued investment in these sectors.S.

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

while forward earnings forecasts are falling. generally. Street forward ROE growth rates are still showing minimal growth. The energy sector return on equity is also largely unchanged on the trailing basis. TSX ROE. bond market losses since the summer of 2010 are both unusually large.S. Trailing Now Leading Forward Earnings In general. median TSX profit growth is a mere 0. 2011 TSX Earnings Forecasts.11 standard deviations. We would expect that to change as oil prices remain close to US$100/Bbl US for West Texas Intermediate. improving earnings for the energy sector (26%) and much stronger earnings for the materials sector. In fact.January 17. This equally weighted small-cap index has soared in just two years. economy.Top Picks Of 2011 . however. to minimize the impact of outliers. Even more dramatic. although the big five banks in Canada are. the table summarizes the median values for each of the sectors. we prefer to see return on equity growth rates of 0. median 8%). recording ROE declines on a trailing basis.22 standard deviations. the weighted average return on equity for the sector is unchanged. 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. Median Values: Key Data Points For The TSX Exhibit 17 summarizes some of the key data points relating to the S&P/TSX Index. Therefore. At this point in the cycle and given pervasive concerns about the U. 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. The median value for financial sector profit growth is 0.19 standard deviations. As indicated by the sector relative weights in the first column.S. it would be expected that forward return on equity would rise. are the gains that were recorded by the small-cap TSX materials sector. materials and financial sectors account for 78. This underpins our outlook for $830 aggregate TSX earnings. however. we anticipate stable to weaker ROE and earnings for 30% of the TSX. In effect. 18 . In order. Key Is Stable S&P 500 ROE The North American equity market gains and concurrent U. The strongest profit growth is being recorded by the materials sector at 0. it should be noted that the energy.3 standard deviations or better. it comes as little surprise that trailing earnings are now rising very slowly in the S&P 500. is likely to record better growth but from lower levels (recently 12%. 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%). For example. however. Given the recent significant run-up in oil prices.45% of TSX market capitalization.

It is also worth noting that the CIBC analyst median return is expected to be 15.03 0.40 22.82 7.20 2.15 CIBC Analyst Implied Return (%) 15.46 9.42 All Sectors Energy Materials Industrial Consumer Discretionary Consumer Staples Healthcare Financials Info Tech Telecom Utilities Source: CIBC World Markets Inc.00 Dividend Yield (%) 1.57 4.71 12. This is especially true for the U.15 5.61 10.21%.34 -0.61 13.39 13. Attractive Financial Sector Yield. Our global portfolio system indicates that the weighted average dividend yield for the financial sector is an impressive 3.S.42 15.S.30 10.36 Cash As % Of Equity 13.59 12.22 18.89 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.59 13.76 Trailing Roe Growth (stddev) 0.31 6.47 14.54 3. Key Data Points For The TSX Median Sector Relative Weight (%) 100. in both the U.55 5. it is recording a median dividend yield of 4.5% of the TSX market capitalization. materials and financial sectors.94 29.S. information technology sector companies are frequently what we also call value-added exporters. our TSX target of 14.S.02%. 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.72 16. In fact.03 20.55 15.44 11.44 4.80 21.93 0.22 0.42 1.03 0.41 9.49 0.05 -0.55 12.99 14.32 -0.12 3.21 0.74 13.800 for year-end 2011 appears likely.04 18.94 0. Finally.76 12.18 5.72% and the Street median return is expected to be 11. the two sectors with the most substantial amounts of cash on the balance sheets would be the materials sector and the information technology sector.S.08 25.58 21.54 0. ROE (%) 8. this would imply a current P/E on forward earnings of less than 15x for the TSX overall.S.84 12.98 15.84%.83 13.92 11.Top Picks Of 2011 .January 17.22 13. Very Large Cash Holdings On The Balance Sheet.08 0.00 1. case.89 18. Nonetheless. as long as the 10-year U.89 11.07 17.80 19.11 25.79 1. 2011 Exhibit 17. That is. 19 .86 11.34 10. In Canada.67 5. Both trailing and forward growth is being recorded by the information technology sector.56 2.72 Forward Roe (%) 11. In the U.52 5.97 10.06 13. although this sector is 2.99 11. more than 50% of their revenues come from international operations and emerging economies.09 -0.22 Trailing P/E (x) 17.53 -0. If the Street forward earnings forecast is correct.09 11.38 24.07 0.76 10.17 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.57 1.76 3.69 16.36 -0.84 Forward Roe Growth (stddev) 0.85 7.47 13. Especially In The U.56 -0. Now Just Make Sure ROE Is Rising Although the financial sector is not demonstrating significant profit growth at present.23 13.93 9.29 12.64 16. Treasury bond yield remains below the ceiling.21 8..16 Street Implied Total Return (%) 11.08 -0.03 10.21 0.19 0.11 16.56 41.00 26.29 12.70 0.11 -0.10 23.05 -0. and Canada but especially in the U.00 5.79 12.38 2.08 21. companies have accumulated significant amounts of cash on their balance sheets as a percent of common equity.80 9.80 18.03 13.95 13. and Canadian information technology sectors.02 7.53 Forward P/E (x) 14. the median forward P/E ratios for the materials sector and the financial sector would be close to 13x one-year forward earnings.

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

2011. 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. 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. For the purpose of this article. bond yields and the need for continued profit growth. outlook. We have indicated target levels for 2012 but these targets are highly dependent on a number of things as we go through 2011. Gold And Materials Sector Performance Small Cap Materials Gold TSX Materials S&P 500 Materials Source: Bloomberg and CIBC World Markets Inc. far more significant. Our long-term. we are focused on our 2011 forecasts. that we may be required to change our asset allocation in the next couple of months. however. however. 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.January 17. depends on all the issues this publication addresses. i. our recommended asset allocation and the implied total portfolio returns. 21 .S. should mark time. Exhibit 20 illustrates the standard format for our basic scenario analysis for asset allocation.Top Picks Of 2011 . 2011 Exhibit 19. ROE growth and quantitative easing.e.. It is true. at least. North American equity markets are overdue for a correction now or. We will look seriously at 2012 targets later in 2011 but for now our concern is with getting this year’s levels correct. namely the bond yield ceiling. Our recommended asset mix is shown for our various investor profiles in the top right-hand corner of Exhibit 20.

equities and 35% Canadian bonds.S.S.January 17.S. If our year-end 2011 targets prove to be correct then. 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. 2011 Exhibit 20. 22 . 20% U.8% ceiling. 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%. we recommended a 45% Canadian equity exposure. This is shown just under the blue “optimistic” button allocation asset mix ranges. It is extremely likely that we will change our recommended asset allocation over the course of the next two to three months. Within this allowable range we have remained at 40% Canadian equities. we have decided to focus on only one of the several investor profiles. This is especially true if the 10-year U. bonds and T-bills.Top Picks Of 2011 . as indicated in Exhibit 21. a 20% U. We have not yet changed our recommended asset allocation for the various investor profiles outlined in the top right-hand corner of Exhibit 20. Treasury bond yield level gets any closer to the 3. When we first introduced the growth investor profile at CIBC. In order to provide some indication of our current view with respect to North American stocks. Basic SAS Source: CIBC World Markets Inc.

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

Exhibit 22 shows our currently recommended exposure to Canadian equities. we can optimize the portfolio based on maximizing return. equities for our growth investor profile. Canadian bonds and U. 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. Our likely changes in the next few months should be guided by these optimized results. currently. 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%. 2011 Choice Of Optimization Using our SAS optimization techniques. Maximize Returns For example. however.January 17.S. while calculating these returns in local currency terms. we do this to see how much our short-term. In every case. In the last example. maximizing the Sharpe ratio (return to risk ratio) or maximizing the total portfolio variance. equities instead of our currently recommended 20% and 50% Canadian equities instead of 45%. Max Return For A 10% Maximum Total Portfolio Variance Source: CIBC World Markets Inc. assuming our optimistic set of targets for 2011.Top Picks Of 2011 . we might choose to maximize total portfolio variance in order to reduce the total perceived portfolio risk. 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. Exhibit 22. In our case. 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. recommended asset mix varies from the one-year mathematically optimized version based on our own targets and assumptions. We must stress that the recommended asset mix depends almost entirely on our forecasts. 24 . 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. The objective.S.

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. we want to consider what the recommended asset allocation would be if our goal were to limit the total portfolio variance. 25 . Maximize Return For An 8% Maximum Total Portfolio Variance Source: CIBC World Markets Inc. the Canadian bond exposure would be reduced by 5% and AA Canadian corporate bond exposure would rise from 0% to 20%. 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). however. of course. equity exposure to zero in favor of Canadian AA corporates. It appears that in order to reduce the variance of the total portfolio. Exhibit 23. a large portion of our expected returns should result from Canadian equities.25% standard deviation of returns. In this case.Top Picks Of 2011 . bond yields remain below the critical ceiling. Using A Growth Profile Allowable Range. A more conservative asset allocation would resemble a constant 45% equities. Nonetheless.S. it supports our conclusion that.26% return with a total volatility of 10. this assumes that our targets for the various asset classes are correct.S. 45% bonds and 15% T-bill mix. then the recommended weights are found under the column heading Sharpe Max in Exhibit 22. For the purpose of this article. therefore. We know from other analysis that that would result in a total portfolio variance of approximately 8%.January 17. the Canadian equity allocation remains at 45%. the optimization system chose to reduce the U. If we optimize. as long as U. 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.

which could materially change our outlook for stocks and bonds in 2011. The combination of the rising bond yields in the U.92% compared with 5% loss from 10-year U. Fortunately. Treasury. otherwise.S.Top Picks Of 2011 .33% during the same timeframe. In August 2010.S. equity market has now risen 85% from the 2009 lows and bond yields have risen from 2.S. generally. we generated a significant 434 bps of outperformance in just four months compared with a fixed 45% equities. Naturally. our relatively traditional growth portfolio held a 35% exposure to Canadian bonds for the purpose of improving diversification. usually requiring that we have some exposure in asset classes that we. The reason for doing so is. 2011 Recent Performance Since August 2010 We are optimistic about the rate of return for U. and Canada resulted in massive outperformance from equities relative to bonds. Treasury bonds. For example.S. to have some degree of prudent diversification.S. Such significant gains in such a short period of time are cause for concern.78% in a little over a four-month period. 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. Our over-weighted equities exposure benefited the total portfolio return considerably and we managed to avoid. entirely. From August 2010 until recently the TSX rose approximately 15% and the S&P 500 rose approximately 21%. in local currency terms. At the risk of being silly.S. bonds that resulted in just the last four months of 2010 by having no exposure to U. our total portfolio returns for the growth investor profile amounted to 10. in which we indicated that bond yields were unlikely to fall any further near term and. were more likely to rise significantly. the 5% loss from U. in fact. and Canadian equities. 45% in bonds and 10% in T-bills. we 26 . and especially given the significant incremental returns in a very short period of time.S. 45% bonds and 10% cash asset mix.January 17. Given that the U. 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.04% to 3.S. The sheer magnitude of these gains relative to a very conservative asset allocation. we published our Investment Strategy Committee Prequel asset mix document. would prefer to avoid. In fact. bonds would have lost over 20% on an annualized basis. equities between August 2010 and the present was approximately 61%. This is approximately 434 bps better than a portfolio with a fixed exposure of 45% in equities. bonds in the growth portfolio. By maintaining the correct overweight recommendation for stocks and correctly underweighting bonds.S. the annualized return from U. and rising stock prices in the U. 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. Bond losses in the Canadian bond portfolio were very slight at –0.S. We have a long list of concerns with respect to exogenous risk factors. while U. is enough to cause some concern in and of itself. the annualized total growth portfolio returns from August to the present was roughly 27%. as long as the Fed can use the magic of quantitative easing to restrict the upward movement in the 10-year 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.

91 0.03 27 . Based on a 14.12 0.0065 0.01 2.03 1.95 14. 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.34 1.92 14 17.01 14.) C$/US$ GPS data calculated through our Global Portfolio System Source: Bloomberg and CIBC World Markets Inc.04 19.33 88. respectively. S&P 500 Yield (market cap weighted) T-Bills (%) 10-year Bond Yield (%) WTI Oil (US$/Bbl) Gold (US$/oz.28 15. Exhibit 24.46 93-103 1.02 0. As we have stated. 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. repeatedly.01 1384 88 15. Recent 13.384 / 90.87 0. 2011 are becoming increasingly concerned about how far the North American equity markets can go from here.272 676 19.16 3.11 0.83 14.800 830 17.55) 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.18 15.95 3.1 16.09 1271 79 16.83 times.73 14. Detailed Targets For 2011 Exhibit 24 provides more detail as to the basis for our 2011 targets. our optimistic outlook for North American equities.97 0.January 17. therefore. the resulting top-down P/E would be approximately 17.S.580 0.78 0.800 / 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 (1.369 1.34 1.98 12.44 1.89 8.11 2011 14.28 3.42 0.14 20.01 - 12.67 17.Top Picks Of 2011 .13 2.92x and 14x.3 3.800 TSX price target at year-end.68 19. 2011 Forecasts TSX Earnings Top-down P/E (x) Bottom-up GPS P/E Median Weighted Average Street Fwd P/E (14.39 0. 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 2011.41 15.02 0.6 17.97-1.

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

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

We expect the company to continue to use these resources to pursue greenfield expansion and further acquisitions.0% NA Nil $130.com . firstcall. Excluding Unusuals EV/EBITDA $0. First Solar. unless otherwise stated.com and ResearchCentral. 5N Plus draws its name from the 99. 5N Plus is trading at an attractive valuation of 10. 5N Plus is on an aggressive organic growth trajectory.Mahesh@cibc. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Price Target VNP-TSX (1/12/11) Key Indices: S&P/TSX Smallcap 25.0M Shrs 89.6x F2012E FD EPS (ex. cash) and $1. 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. expects to expand capacity by 92% by 2012 to 2.2M No Current $8.9x 9.Tharp@cibc.33A $0. P. Full contribution from its Firebird expansion is expected in Q1/F12. Investors should consider this report as only a single factor in making their investment decision. CIBC World Markets Inc. Rate (E) 52-week Range Shares Outstanding Float Avg. Brookfield Place. 2011 Stock Rating: Clean Technology Sector Outperformer Sector Weighting: 5N Plus.74 GW annually. 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.cibcwm. including potential conflicts of interest.7% $4.4x Stock Price Performance 2010A 2011E 2012E 10. which is at a significant discount to the peer solar group at 16. 5N Plus has $56.0M Nil / Nil May $2.21 3-5-Yr. Incorporated Shining Bright In The Land Of Cloudy Sky Market Weight 12-18 mo. Our price target of $8.09 in cash per share.85 per Shr 12. CIBC World Markets does and seeks to do business with companies covered in its research reports. As a result.4x 14.. the global low-cost producer of solar PV modules and 5N Plus' biggest customer. www. produces and recycles high-purity metals and compounds for electronic and solar applications. Toronto.999% purity of its products.653 $329. Canada M5J 2S8 (416) 594-7000 Ian Tharp.6M 27. Daily Trading Vol.5nplus.09 per share) on its balance sheet and generates $15 million-$20 million annually in operating cash flow.8x 19.ca Sumeet Mahesh 1 (416) 594-7293 Sumeet.77-$7. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.50 is based on 15. 161 Bay Street.50 $7. Reuters. CFA 1 (416) 594-7296 Ian.com All figures in Canadian dollars.Institutional Equity Research Company Update January 17.7x 2012E FD EPS.ca Find CIBC research on Bloomberg. EPS Gr. cash).37E $0. 2010 2011 2012 P/E 2010 2011 2012 Fully Diluted.50E 21.7 million in cash and cash equivalents ($1.O. See "Important Disclosures" section at the end of this report for important required disclosures. Box 500. where applicable.35 45.0x F2012E FD EPS (ex.8x Source: Reuters Company Description 5N Plus develops.3x 6.

2 ($16.6 $8.1 F2011E $7.7x 2.4 $35.7x 15.1x 46.00 0.6% 40.7 $16.4% F2010A 1.5) ($1.8 $125.6) ($3.0x 3.8% 27.7% 31.6% 77.6x $329.3 9.8 $35.0 Revenues EBITDA EBITDA Margin Calculated as CFO divided by Net Income.3% 21.8) ($0.0 $0.7 $0.1% SO $0.0x 3.21 Rating: $8.7% 28.8x 43.5 ($52.3 $1. The recent equity investment in Sylarus has further strengthens this effort.1) $12.2% 45.9x $3.50 All Figures in CAD$ millions. Calculated as CFO less Capex Source: Bloomberg.2% F2012E 17.0 $0.7% F2011E 0.2x F2009A $69.50 46.19) F2011E $57.4x 10.11 2011E EBITDA 9.2 $28.7x -2.1 $15.4% 29. Management is targeting three main markets: i) the CIGSbased thin film solar market.49) -1.4x -37.27 F2010A $68.35 $60.7) ($1.2x 19.3x F2012E 13.1x 4.4x 4.6x 10. Company reports and CIBC World Markets Inc.9x F2009A 18. ii) the semiconductor wafer market and iii) the germanium market.3 13.0 50% 40% 30% 20% 10% 0% 2007A 2008A 2009A 2010A 2011E 2012E ($4.7) ($6. We estimate these markets to be in excess of $380 mln in size with prospects of substantial future growth. Through the Firebird acquisition.1x 3.tharp@cibc.6 $143.Its favorable cash position should allow for growth through Greenfield expansions or acquisitions. 5N Plus continues to be well capitalized .3% 41.6 F2010A $16.7x 3.8x $2.1 $4.9) $7.3x 4.5) ($1.1x 2.3 $2.9 $7.1x 12.4 ($60. 31 . Diluted (Ex.1x 27. Sales to the solar industry represented 74.7% 41.9 $ 0.2 $3.2% 45.5) Investment Thesis 5N Plus develops and produces high-purity metals and compounds for electronic applications and offers related recycling services. 5N Plus focuses on specialty metals such as Te.4% 31.January 17.0 $4.2% in Q2/F2010. Source: Company reports and CIBC World Markets Inc.14) -2. MBA 416-594-7296 416-594-7293 ian.6 $36.4 $2.1 $1. Management indicated that sales into these markets have the potential to double its current annual revenues within the next three years.1 F2012E $22.33 45.ca LTM P/E 15.7) $100.0% 142.7% 30.2) ($1.8% 18.5 $21.6% 44.1x $3.9x $323.0% 34. Cd and Se and on related compounds such as CdTe and CdSe.4x F2012E $104.7x -2.2 $28.6) ($8.9% 29.2 $2.2x 2.0% F2012E 1.6 $0.2 ($68.8x F2010A $70.4 $4.0 $16.1x $2.7 ($63.8 $31.6x 3.2x F2011E $81.4 $0.9% F2009A 18.76 2011E P/E 14. CFA Sumeet Mahesh.Shining Bright In The Land Of Cloudy Sky . 2011 5N Plus Inc. 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.0 $46.37 46.2 $5.4% in Q1/F2011 but below 85.9 $ 0.5 $112.To 18-Month Price Target: $8.5x 4.32) -2.3x 4.2% 50.1% 113.8 $20.0 $20.mahesh@cibc.50 17. (VNP-TSX) Current Price: $7.39) -2.2x 13.8x 17.9 $23.62 $40.4% 30.45 LTM EBITDA 10.7% 76.0x 20.0% 22.9% 31.21 12.9 $25.2 14.6x 21.5x 38.45 45.9 $ 0.3 $2.9 F2009A $16.4 11. EBITDA & EBITDA margin $120.9 $0.3% 29.0% 24.7x F2010A 12.8 ($6.3x 12.5x 1.1% 27.9 $22. 5N Plus products are utilized in a number of electronic applications including Thin-Film photovoltaics (PV) and the radiation detector market.0% F2011E 23.0x F2011E 11.1 $4.ca sumeet.8 ($4.9 $22.8x $339.0) ($13.7 $0.1x $324.3 $2.0 F2012E $73.6 $167.8 $32. the above 70.2% Chart: Sales.0% 20.1 $ 0. 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% 32.1% F2009A 0.4% of total sales in Q2/F2011.17 F2009A $65.3 $80.2% 29.2 ($8. 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: $7.1x 18.2 $0.8 $8.5% 35.7% 23.9% Dividend: Yield: F2010A 25.

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

5 7.000 $562. 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.Institutional Equity Research Company Update January 17.1X $167.9x 11.7x 8.cibcwm.) 2009A 2010E 2011E EV/DACF 2009 2010 2011 $40.5M 60.71-$9. providing the company with a number of light oil and gas targets to develop. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.2x 7.com and ResearchCentral.0 $110. Angle is also developing a Cardium light oil play (last well tested at over 1.87 Angle Energy is an intermediate-sized E&P company (~13.5x 5.93E $1. including potential conflicts of interest.25 $7.000 Boe/d of light oil and liquids-rich gas.0M $8. The emerging focus for the company has been the Viking light oil play in Harmattan. unless otherwise stated.ca Mike Woodward. production from this play could reach 5.5X No Current Projected Total Return 52-week Range Shares Outstanding* Float Avg.5% $6.O.Intermediate & Junior Producers Sector Outperformer Sector Weighting: Angle Energy Inc. See "Important Disclosures" section at the end of this report for important required disclosures. As a result. including the Wilrich. firstcall.angleenergy.. as well as a solid ability to control cost. We believe Angle will start to trade at a premium over the year with continued success in the Viking. P.20 71.35 per Shr 1. CFA 1 (403) 216-3405 Adam.4 $65. which posted a marked increase in industry activity over 2010. its valuation today is at 6. CA 1 (403) 216-3404 Mike. 89% grp). Toronto. www. Looking Towards Continued Success In Emerging Central Alberta Viking Play $9. 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. Daily Trading Vol. Investors should consider this report as only a single factor in making their investment decision. 161 Bay Street. Reuters. CIBC World Markets does and seeks to do business with companies covered in its research reports. Box 500.500 Boe/d today).com . 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 $0. Canada M5J 2S8 (416) 594-7000 Adam Gill.Gill@cibc. The company's asset base is concentrated in the prolific west central Alberta area.4M Shrs 290.2x grp) and at 96% of our Risked NAV (vs.ca Find CIBC research on Bloomberg.1x Source: Reuters Company Description Angle Energy Inc.200 Boe/d) and a number of gas resource plays. Brookfield Place.2 9. 7. While Angle has better-than-average exposure to multiple high-impact developments.8x 2011E EV/DACF (vs.7M Nil / Nil December 11.39E 8. with Angle having up to 195 potential new drilling locations.com/ All figures in Canadian dollars. Price Target NGL-TSX (1/12/11) Key Indices: None 17.7x Stock Price Performance DACF ($ mlns.90A $0. 2011 Stock Rating: Oil & Gas . Results from the initial five wells have been impressive. where applicable. By 2012.Woodward@cibc. Market Weight 12-18 mo.

7) Year operating netbacks divided by reported P+P FD&A cost.8x (versus the group averages of 89% and 7.7x 1. Amoco Matthew Mazuryk VP. Canoe Capital Notes: 1.) Hedging Gains / (Losses) Royalties Operating Costs Operating Netback G&A Interest Cap Tax/Other Cash Flow Netback $61.0 $150. respectively).472A 7. Engineering Harvest.00) $20.25 Capitalization And Market Statistics Share Price Shares Outstanding 1. Angle Energy President & CEO.0 $73. Crossfield.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 .7x 1. for recent acquisitions and equity issues).Announced completion of $60 million public offering of convertible debt Dec 16/10 .2x 11.Current Total Credit Facility Unutilized (% Of Capacity) .7 (41%) Production Production (Boe/d) Q1 Q2 Q3 Q4 FY Growth % Gas Per-Share Growth 2009A 7.5x $180.54 $4.05) ($1.95E 6% 2011E 14. 2010E 2011E $60.8x $54.TSX) Current Price: C$7. 2.75 $0.49) $17.9707 2010E $33. Hoskin & Harcourt LLP CFO.3 50.0x) Group Average Total Credit Facility .00 ($9.00 ($7.290A 10.645A 7.87 71.53 Group 9.21) ($0.5 $563 $167 $729 n/a 290.600E 28% 62% -11% 2010E $0. Net debt includes convertibles and is based on most recent quarterly balance (adj.2x 7.11 $85.00 $20. Relative Valuation: Angle is currently trading at a Price to Risked NAV ratio of 96% and a 2011E EV/DACF multiple of 6.Proven 3. 34 .22 96% 89% December Sector Outperformer Adam Gill.3 Total Net Debt at Year-end ($38. 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. 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. 2011 Angle Energy Inc (NGL .9700 2011E $39.Announced completion of $25 million flow-through financing Nov 2/10 . Market Capitalization Net Debt 2.021A 13.99 $66. $44.2 Development Spending 5.48) $0. 3. CFA: (403)-216-3405 / adam. 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.4 $187.8 $106.8768 2009A $28.45 Recent News Jan 6/11 .gill@cibc.000 2010E P/CF EV/DACF EV/Boe/d EV/Boe . Land Yangarra.25/share as Angle has best in class operating costs (2011E $6.99 $0.3x $75.05) $17. Avid Elizabeth More VP.94 $3. Encal Glen Richardson VP.28E $0.76 $0.98 ($2.Looking Towards Continued Success In Emerging Central Alberta Viking Play .76 $21. Exploration Flagship. 6) Y/E P+P reserves divided by Q4 annualized production.5x 11. Operations E4 Energy.31) ($0.P+P (incl.1x target multiple to our Risked NAV of $8. and tight gas assets at Edson.35 $0. including acquisitions). Key Assets: Key assets are the Viking drilling inventory of approximately 195 wells in the Harmattan area.25/Boe vs.0x Cash Flow Per Share CFPS (Diluted) Q1 Q2 Q3 Q4 Diluted Growth 2009A $0.5 $16.00 $84.003A 7.Years 6.24A $0.2 27.18A $0. CA: (403)-216-3404 / mike. Penn West.com 2011E NGL 5.36 ($7.026E 9.2 59% 54% 11.3x 6.72 $0. KPMG. Osler.48E 55% Commodity Assumptions WTI Oil (US$/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. Penn West.61 $79.55/Boe).0 $163.Announced operational update and 13.2x $74. E3 Energy.37) ($6. Crossfield. Financial Flexibility ($MM) Bankers: CIBC.To 18. Sproule Graham Cormack VP. Oil & Gas CEO. Encal Heather Post Controller PwC.662 $26.0x. Our 12-18 month price target of $9.22/share versus the group average of 1.75 $4.250E 48% 58% 31% 2011E 16.25/share is based on a 1.51 $77. incl.Announced operational and reserves update Management (Ownership: 9. AGS Capital Management Partner.woodward@cibc.2x. 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. ATB and BMO 2009A Cash Flow from Operations $40.37) ($1.24A $0.24) ($4. Brooklyn. * Reserves are updated for acquisitions/divestitures.03 ($2. 4) Excludes net acquisitions.5 $147.382 $36.4x 1. Core NAV Risked NAV P/Risked NAV P/Risked NAV (Group Average) Fiscal Year End NGL 8.0x $106.04 1. and its asset portfolio has exposure to both high impact natural gas (Falher/Wilrich) and oil (Viking/Cardium) development opportunities.21A $0. Cardium and Ellerslie rights in Ferrier.90A $1. FD&A Cost .Announced $25 million bough deal equity financing Oct 20/10 . Finance & C Lightning.TSX Only Relative Valuation $7. TriGas Heather Christie-Burns President & COOCrossfield.99 $0.25) $23.06 $8. Fekete Stuart Symon VP.com Mike Woodward.01) $14.085 Group 6.528A 58% 2010E 8.Released Q3/10 results Oct 21/10 .87 12.20A $0.08 $4.37 $3.446A 7. Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues).27A $0. EV/Boe .552A 7.9 2. Source: Company reports and CIBC World Markets Inc. FDC) Cash Basis Recycle Ratio (Incl FDC) 7.42 $3.591 Investment Thesis. Enterprise Value Distribution (Current) / Frequency / Yield Average Daily Trading Volume (50 Day) .49) ($6.500 Boe/d production goal Nov 10/10 .P + P 3. Encal.73 ($2. Enterprise value to reserves (based on current reserves.09) ($0.74 $14.20A $0. group at ~$9. Ret. 5) Equals cash distributions/dividends divided by cash flow.Month Price Target: C$9.55 $4.6%) Name Position Recent Positions Gregg Fischbuch CEO Brooklyn. FDC.January 17.3) Total Debt / CF (Y/E Debt To Year CF) (1.

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

161 Bay Street.02 16.3x 2011E CFPS. 2011 Stock Rating: Energy Equipment & Services Sector Outperformer Sector Weighting: Black Diamond Group Limited Accelerating Oil Sands Development Will Drive 2011 Performance $24.ca Jon Morrison 1 (403) 216-3402 Jon.00 $21.4A $49.6M $1. Brookfield Place. www. P. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.1x 6. In our view. Black Diamond is trading at 6.7E $66.0x Stock Price Performance Cash Flow Per Share 2009 2010 2011 P/CF 2009 2010 2011 $2. In our view. CIBC World Markets Inc.com and ResearchCentral.blackdiamondlimited.) 2009 2010 2011 EV/EBITDA 2009 2010 2011 $35.4M 10. We expect oil sands capital investment to accelerate in the coming years. Rate (E) 52-week Range Shares Outstanding Float Avg. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2009 ROE (E) Net Debt Preferred Common Equity Convertible Available EBITDA ($ mlns.9% December $11.72 Black Diamond is a leading provider of remote workforce accommodation and workspace solutions in the WCSB and regionally in the U.08 / 4.2x 2011E EPS and 6.Morrison@cibc. Market Weight 12-18 mo.6M Shrs NM $356. firstcall.Fetterly@cibc.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. Box 500.S. we would not be surprised to see Black Diamond secure additional oil sands awards in coming months and expand its 2011 capital program. at a slight premium to the average for its peer group.4x 2011E EV/EBITDA. where applicable. Toronto.66E $3. We have a Sector Outperformer rating on the company. 10-106661 © 2010 CIBC World Markets does and seeks to do business with companies covered in its research reports.cibcwm. including potential conflicts of interest.com All figures in Canadian dollars.00-$22..Institutional Equity Research Company Update January 17. Daily Trading Vol. the company is well positioned to benefit from increased capital spending in the Canadian oil sands and from accelerating resource play development. unless otherwise stated.com . 14.33A $2.2x 6. EPS Gr.ca Find CIBC research on Bloomberg.0M No Current 3-5-Yr.45E 9.4x 8.O.7M Nil $195. In addition to the recent award of a long-term rental agreement for an 800person remote accommodation project with Suncor Energy.3x 8. Canada M5J 2S8 (416) 594-7000 Jeff Fetterly.6% $49.9E 11. Investors should consider this report as only a single factor in making their investment decision. 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. Price Target BDI-TSX (1/12/11) Key Indices: None NM $16. Reuters. As a result. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.S. See "Important Disclosures" section at the end of this report for important required disclosures. CFA 1 (403) 216-3400 Jeff.88 per Shr 9.

morrison@cibc.9 $18.4 40% $11.2 $28.65 2009 $75.6 $34. Workforce Accommodations.6% Black Diamond has established itself as one of the leading remote accommodation providers.16 Gross Margin Gross Margin % EBITDA (1) EBITDA % Cash Flow From Operations (2) CFPS (fd) EPS (fd) (2) $31.3400 | jeff.23 2009 $0.0) $30.43 $59.0% 2009 9.0) $54. (2) Based on adjusted fully diluted figures. (2) a proven management team that has extensive experience operating within its business.7 $21.3 Investment Thesis 2008 8.2x 9.7 $10.8 64% $7.08 2.63 $2. and (3) a robust and visible pipeline of growth opportunities.9 ($3.58 $0.05 2011E $170.8 $4.8 ($1.8 $49. the company offers several key attributes for oilfield services investing.3 $10.4 $14.00 Company Description 2008 $43.4 $10.3x 13. Source: Company reports and CIBC World Markets Inc.6x 8.fetterly@cibc.3x 15.1 ($4.1% 10.6% 8.5 $2.7 $15.33 $2.4 $20. 37 .0% 2011E 6.0 $1.4 $0.7 $1.51 $33.9 $12.4 $2.1% 16.2 $136.4 $1.7 $73.4 $75.1% 12.2 $17.2x $10.8 ($5.6 $170.0 $19. In our view.3 $66.25 1.0 $35.66 $2.67 $0.6 ($0.4) $19.2x 20.2x $12.9x 15.3402 | jon.0 2010E $79.8 $26.8x $11.8x 13.26 Q3/09 $16.8 $1.1 $17. Chart 1: Revenue By Geographic Segment (2010E) 2008 $73.0) $42.4x 6.0 $40. Space Rentals.S. The company has three business segments. 2011 Black Diamond Group (BDI-SO) Current Share Price: 12-18 Month Target Price: All figures in C$ 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.1 $41.4 $20.5 $9.5 $17.9 $25.January 17.4 $1.3 $1.8 $2.8 $10.6 2009 $45. CFA | (403) 216 .3x 14.72 $24.2x 20.8 47% $7.37 2010E $136.94 1.0 $24.4 $2.3% 2010E 8.8 $18.6 $7.6x $11.9 $13.7 57% $12. and Energy Services.6 $0.8x 9.ca $21.6 $20.ca Jon Morrison | (403) 216 .95 2010E $1.6 $2.7 2011E $101.53 Key Operating Statistics (Current Quarter) Reported Q3/10 Total Revenue $32.40 1.5) $31. 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.13 $46.8x 8.Accelerating Oil Sands Development Will Drive 2011 Performance .06 2011E $1.14 % 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.7 $3.45 $3.7 $49.20 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. including: (1) exposure to a business and competitive landscape with attractive fundamentals.

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

Commercial Aircraft.00M $3.29 per Shr 15.674 $9.20 for the CSeries. Rate (E) 52-week Range Shares Outstanding Float Avg. Bombardier Aircraft Orders Starting To Pick Up.2M C$0.763. CIBC World Markets Inc. EPS Gr.bombardier. BA has received orders for 15 business jets and 15 commercial aircraft.986:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports. BA is well positioned to benefit from this.0x 14. Daily Trading Vol. Systems and Signaling for the rail public transit sector). Toronto.39 BBD has two reportable manufacturing segments: Aerospace (Business Aircraft.com . Reuters. C$2.O.446. If the business jet operations can return to a book-to-bill ratio of 1:1 in Q1/F12.Institutional Equity Research Company Update January 17.00 C$5. Specialized and Amphibious Aircraft.com All figures in US dollars. Order activity at BA has picked up in recent weeks.728. unless otherwise stated. P.ca David Galison 1 (416) 956-3548 David. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. 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. Services.25-C$6.8x 13.(C$0.cibcwm.0M No Current 3-5-Yr.com and ResearchCentral. BBD remains optimistic about order activity and execution of the CSeries launch.ca Find CIBC research on Bloomberg.Galison@cibc.3x Stock Price Performance Source: Reuters Company Description Bombardier Inc. CFA 1 (416) 594-7285 Michael.50 for BA and C$1. Price Target BBD.37E $0.Willemse@cibc. investors should start to generate strong interest in the stock once again.9% January $2. 161 Bay Street. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. where applicable.10 / 1. So far in Q4/F11. www. is an internationally diversified manufacturer supplying aerospace and rail transportation equipment and services. as the large business jet market represents approximately 80% of its business jet sales.0M Shrs 5. firstcall.5% C$4..481. Customer Services and Flexjet/Skyjet) and Transportation (Rolling Stock.41E 14.459. 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. See "Important Disclosures" section at the end of this report for important required disclosures.00 price target is based on C$3. CSeries Risk Well Priced In C$7.7% $1. Market Weight 12-18 mo. Investors should consider this report as only a single factor in making their investment decision. Industry surveys continue to suggest favorable demand for the CSeries over the next few years. 2011 Stock Rating: Aerospace & Defense Sector Outperformer Sector Weighting: Bombardier Inc.0M $347. Canada M5J 2S8 (416) 594-7000 Michael Willemse. Our C$7. including potential conflicts of interest. Box 500.991.24 1.39A $0.0M 1.B-TSX (1/12/11) Key Indices: Toronto 26. Brookfield Place. As a result.

7) ($365.0x F2011 E $17.Transportation *US$ bln Valuation & Outlook Current Price: Price Target: 12-18 Mo Return: C$5.606.0) $456.7x 9.9x C$13.0 $4.054. Management intends to maintain a diversified product strategy with a continued focus on the rail and aerospace markets. (Ex.4% and demand profile. Services.09 F2012 E $3.442 9. Bombardier's diversification strategy has allowed 7.7 $1.3% F2013 E 12.9 $1.0 $4. 17.2% 18.10 0.336.6% 8.1x $2.4% the company to offset weakness in one area with other segments that have a more stable growth 6. Company reports and CIBC World Markets Inc.0 $915.2% 8.0 $1.0 $1.0 ($767.098. Specialized and Amphibious Aircraft.9% 28.2 ($1.743 F2012 E $1.55 1.2 $994.02 1.3 $66.Consolidated Gross Profit EBITDA EBIT EBT Minority Interest Net Income .017.0x 1.1% 3.223.6x Deliveries (units) F2013 E Business Aircraft $21.2x 4.0 $176.0 $1.00 Michael Willemse. *Bombardier Fiscal Years Ending January 31. Systems and Signaling).215.0x Aerospace: the major growth driver for regional jets beyond F2013 will be reflected by demand from the CSeries.460.380.596.269.7x 15.9% F2011 E 19.0 $712. Bombardier is actively seeking to grow by providing new products in the 4. FD EPS.162.7x F2012E P/E 13.4% company’s traditional markets (North America and Europe) as well as through an increased focus on emerging markets such as Asia.8% 3.To 18-Month Price Target: F2011E EBITDA 9.769.5 $8.0 $655.5x 12.7% F2012 E 1.663.9x 5.2 $8.7% 3.4x 7.5% 23.0 $4.5% 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 $16.304.0 $1. However. Commercial 8.39 1.7x Transportation (Rolling Stock.1% F2012 E 17.7% 27.3x Bombardier has two reportable manufacturing segments.9 $1.5% 4.0 $68.0 $347.5x 12.4% 21.0 $0. MBA 416-594-7285 416-956-3548 michael.366.6) EV/Sales: $563.763. We expect that business jet demand will begin to recover in calendar 2011.2 $845.8 ($1.743 F2011 E $1.000 $1.1 $1.2 $32.Cont.08 F2011 E $3.1x 0.0 $958.773.3 $0.9 Enterprise Value: ($1.Bombardier Aircraft Orders Starting To Pick Up.7% Transportation has been somewhat sheltered from the economic downturn.103.621.willemse@cibc.0 $346.3) $137.7% F2011 E 1.8x 8.7x 2.0x 0.0 $9. 7.5x 12.6x 9.92 0. F2013 E 1.4x 1. albeit at a moderate rate.6x 2.171.5) $165.4% 4.5 $0.8x 21.0 $1.7% 17.442 7.41 1.8% 4.20 P/BV: FCF Yield: $2. Fiscal 2011 = Calendar 2010 for comparative purposes.6% F2010 A 0. CFA David Galison.8x 3. BA has been negatively impacted by 9.0% 16. Growth for business jets beyond F2013 will likely benefit from the introduction of the F2013 E Learjet 85.0 $5.5 $3.4 $0.8x 57.7% 8.5 $0.000 $500 $0 F2013 E Consolidated Chart Calculated as CFO divided by Net Income.755 F2010 A $1.604.653.39 C$7.0 $346.1% 5.Aerospace *Current Backlog . 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 .3 $3.3x F2012 E $19. EBITDA EBITDA Margin EBIT EBIT Margin 40 .9 $1.0% 5. Oper.175.5x 16.2 $66.842. Aerospace (Business Aircraft.304.0) ($671.0% 5.7% 3. 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 0.4% cyclical swings in the aerospace sector.9852 F2012E EBITDA Investment Thesis 12-Jan-11 F2011E P/E 14.405. 2 Calculated as CFO less Capex Source: Bloomberg.00 29.8 $0.2 $1.3% 6.570.164.5x 13.4 $2.4x F2010 A 18.39 Rating: C$7. given that large-scale transit infrastructure is typically funded by the public sector.40 F2012 E 15.January 17.0 $346.0 $3.175.500 $1.980.236.9x F2010 A $19.1 $2.1x $2.037.9 $66.743 Commercial Aircraft Amphibious Aircraft * Current Backlog .5 $1.2x 69.824.7% 4.666.4x C$13.71 0.751.2 $9.6) EV/EBITDA: ($216. CSeries Risk Well Priced In .0 $0.0 $698.32 $3.2x 17.442 10. 2011 Bombardier (BBD.3) ($42.9 $4.galison@cibc.9x $2.37 1.020.B-TSX) Current Price: 12. Customer Services and Flexjet/Skyjet) and 8.0 $3.26 F2010 A $4.6x 1.ca All Figures in USD$ millions.3x C$13.8x 6.6 $5.8x $3.73 Sector Outperformer C$5.1 $0.4 $0.500 $2.7% 22.6x 1.565.15 F2011 E 15.0x Aircraft.2% 5.ca david.0 $0.574.9 $5.7 F2012 E 152 94 5 Q3/F11 A Q3/F11 A F2013 E 183 105 5 SO Price Target Represents: F2013 E P/E: $1.2 $0.1x 11.0x 0.1x 4.

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

Toronto.69E 7. where applicable.Geol. See "Important Disclosures" section at the end of this report for important required disclosures.to 18-month price target of C$15.70-C$12.23/FD share unrisked).514 gross acres in nine E&P blocks and produces ~7. Daily Trading Vol. Middle Magdalena and Putumayo basins of Colombia. The Right Ingredients For Success Market Weight 12-18 mo. Rate (E) 52-week Range Shares Outstanding Float Avg. P.International E & P Sector Outperformer Sector Weighting: C&C Energia Ltd. 2011 Stock Rating: Oil & Gas .53M Nil NM No Current C$15. 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. CZE is relatively undervalued considering the magnitude of its upcoming exploration program. The company has a 77% average working interest in 766. development and production of oil resources in Colombia.(C$0. Price Target CZE-TSX (1/12/11) Key Indices: TSXOilGas NM C$6.985:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports. is C$7. bringing our price target to C$15. Management expects that 2011 production will range from 7.000 Bbls/d from two of its four Llanos Basin blocks.5x 7.com and ResearchCentral. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. CIBC World Markets Inc. firstcall.3M 29.021 $656. which could be realized from 2011 exploration drilling. In our view.56E $1.75.O. CZE's operations are focused in the Llanos.ccenergialtd. Box 500.75 C$11. CZE has identified 30 prospects and leads and plans to drill 15 exploration wells in 2011. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Investors should consider this report as only a single factor in making their investment decision. www. As a result. Canada M5J 2S8 (416) 594-7000 Ian Macqueen.68/FD share in risked upside (C$20.85 per Shr NM $69.com .73 54.Nielsen@cibc.75.300 Bbls/d from the Cravoviejo and Cachicamo blocks. P. Brookfield Place. 161 Bay Street. We have also included C$8.90 3-5-Yr. acquisition. is an independent oil and gas company engaged in the exploration.87E $1. Reuters. Our base NAV estimate for CZE.17/FD share.cibcwm.7x 6.Macqueen@cibc. EPS Gr. unless otherwise stated. 2010 2011 2012 P/CF 2010 2011 2012 $1. including potential conflicts of interest. It approved a 2011 capital investment budget of $130 million to $145 million. 1 (403) 260-8675 Ian..0M Shrs 65.ca Paul Nielsen 1 (403) 216-3403 Paul.1x Stock Price Performance Source: Reuters Company Description C&C Energia Ltd.Institutional Equity Research Company Update January 17.0M Nil / Nil December $15.000 Bbls/d-7. including development of the producing assets.ca Find CIBC research on Bloomberg.com/ All figures in US dollars.

$M Net Debt .ca Net Asset Valuation .75 Target Return: 32.00 $4.7x) (0.Debt Adjusted Financial Statistics . Ph: (403) 216-3403 E-mail: Paul.1x 2012E 7.97 2011E 7.50 $0.3x 8.85 P/NAVPS (Risked) 75% Target P/NAVPS (Risked) 99% Total Unrisked Asset Value C$1.5x 0.69 $39 $0.4 0% 128 (16%) 141 2012E $111 $111 $92 $1.Nielsen@cibc.Macqueen@cibc.2x 2011E $85.87 $39 $0.72 $145 143% ($43) 2011E ($13) (0. 2011 C&C Energy Ltd.% Free Cash Flow Debt Analysis Net Debt .50 $0.4x 6.9x 7.0x) 2011E 6.00 $4.6x 2012E $85.5x 8.51 $4.0x 9.10% C$27.842 5.97 2010E 5.352 6.mm Average Trading Volume (50 Day) Annual Dividend / Yield Sector Outperformer Analyst: Ian Macqueen.4x 43 .352 6.90 50 C$593 (C$57) C$536 29 65.0% Associate: Paul Nielsen.541 7. P.$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.37 $0.10% C$15. 2010E $79.5 0% 151 29% 167 2011E $120 $120 $102 $1.6x 9.541 7.2009 Total Risked Asset Value C$936 Total Risked NAVPS .5x 7.618 Total Unrisked NAVPS .1x) 2010E 7.00 / 0.$M Float .January 17.56 $32 $0.021 C$0.8 0% 117 nmf 130 2010E $81 $81 $78 $1.$mm Enterprise Value .1x 9. Ph: (403) 260-8675 E-mail: Ian.72 $150 163% ($58) 2012E $45 0.$mm (except per share values) Colombia EBITDA Total EBITDA Total Company Operating Cash Flow (US$mm) CFPS (Diluted) Operating Income Operating EPS (Diluted) Net Capex Net Capex/Cash Flow .40 P/NAVPS (Unrisked) 43% Target P/NAVPS (UnRisked) 57% CIBC Deck NYMEX WTI (US$/bbl) NYMEX Gas (US$/mcf) FX (US$/C$) Operating Statistics Colombian Natural Gas Production Natural Gas (mmcf/d before royalties) Colombian Oil Production Oil & Liquids (bbl/d before royalties) Production (mboe/d before royalties) Natural Gas % Production Per Share (boe/d per MM FD) Production Growth Per Share .1x) (0.4% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .7x 10.The Right Ingredients For Success .90 Price Target: C$15.842 5.97 2012E 6.64 $83 107% ($5) 2010E ($56) (0.ca 2010E C$11.% Production Per Share (boe/d per MM FD) . (CZE-TSX-V) Current Price: C$11.Geol.

unless otherwise stated.. We estimate that every 1-point change in operating ratio is equivalent to $0. Rate (E) 52-week Range Shares Outstanding Float Avg. EPS Gr. including potential conflicts of interest. There were concerns in 2010 about increased regulatory oversight of the rail industry as shippers looked to reduce freight rates. continues to play catch-up. such as building materials. Toronto. forestry and automotive. firstcall. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.Institutional Equity Research Company Update January 17. Canada M5J 2S8 (416) 594-7000 Jacob Bout..8M 168. CFA 1 (416) 956-6766 Jacob.O.e. As a result. Daily Trading Vol. where applicable. CP remains the railway with the best opportunity to improve its operating performance.81E $4.0M Nil $5. The diminishing risk of re-regulation in the rail industry bodes well for CP (and the railroad industry).0x 13. metallurgical coal.50 168. potash) and the option value associated with its operating ratio.9M $1. P.03E 17.04 per Shr 11.Bout@cibc. CP is our top pick given its leverage to bulk commodities (i. Reuters.58-$67.cpr.6% December $30.ca Find CIBC research on Bloomberg.com .20 in EPS.Chiang@cibc. 161 Bay Street.08 / 1. With ~20% of CP's 2011 capital program focused on growth initiatives. 2010 2011 2012 P/E 2010 2011 2012 $3.ca Kevin Chiang 1 (416) 594-7198 Kevin. See "Important Disclosures" section at the end of this report for important required disclosures. 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. It provides freight services across Canada from Montreal to Vancouver and into key centers in the US Midwest & Northeast.15-$0. CIBC World Markets Inc.41E $5. we believe the company is well positioned to take advantage of the second legup in rail volumes as North American-centric cargo.7% $4.4x 15.115 $11.184.6M Shrs 661. CIBC World Markets does and seeks to do business with companies covered in its research reports.25 3-5-Yr. Price Target CP-TSX (1/12/11) Key Indices: Toronto 12.ca All figures in Canadian dollars.8M No Current $78. www. 2011 Stock Rating: Transportation Sector Outperformer Sector Weighting: Canadian Pacific Railway Limited Rail With Option Value Market Weight 12-18 mo.071. Box 500. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.5% $49.cibcwm. It is targeting an operating ratio in the low 70% range within the next three to five years (from high 70%s currently). Brookfield Place.00 $66.389. Investors should consider this report as only a single factor in making their investment decision.com and ResearchCentral.2x Stock Price Performance Source: Reuters Company Description CP is one of two Canadian Class 1 railways and has a bulk freight orientation.

CP transports bulk commodities. Northeast. Deregulation Of Canadian Grain: Ability to increase “turn” – grain handlers on side.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.4% 2011E 76. CP-NYSE) Current Price: C$66.To 18-Month Price Target: C$78. The company owns approximately 10.15-$0.S.957 13.3x CP’s railway feeds directly into the U. Agreements with other carriers extend its market reach east of Montreal in Canada.080 4.81 2011E 5.S.882 852 $5.26 2011E $8.61 34% 1. CP is targeting an operating ratio in the low 70% range.084 11.1% 11% 1.4x 32.41 2012E 5.01 37% 1. 2011 Canadian Pacific (CP-TSX.10-year agreement with Teck provides increased stability in the coal division.700 miles of track are owned jointly.73 45% 1.0x 8.25 $67.S.20 in EPS. Of the total mileage operated.81 1.7x 21. Pension: Pension expense will be headwind over the next three to four years. leased or operated under trackage rights. Cash Flow CFPS FCFPS 2010E $3.9x 7.459 5. through the U. merchandise freight and intermodal traffic.4x 8.50 $49.00 All figures in $ millions.January 17.80 $4. DM&E: Expect EBITDA to double from $100 million to $200 million in five years.5x 7.1x 14.0x 17.92 0.ca Company Profile Share Price 52 Week High 52 Week Low Shares Outstanding (Mln) Market Capitalization ($ Bln) $66.21 1.1x 2012E 13. 2. from the East and West Coasts.619 645 $3.2x 8.314 1. Key Multiples CP P/E Peer P/E CP P/CF Peer P/CF CP EV/EBITDA Peer EV/EBITDA 2010E 17.15 -$1. Midwest and 1. except per share data Sector Outperformer Jacob Bout (416) 956-6766 jacob. We estimate that every 1-point improvement in CP's operating ratio adds ~$0.800 miles of track.07 $2.800 miles in the U.9x 8. approximately 6. 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 77.599 1.4% 12% 0.973 1. Potash: Risk of Canpotex diversifying potash contract post-2012 (CP currently the exclusive shipper for Canpotex).2% 12% 1.6x 10.S. 45 .4% Coal Sulphur & Fertilizer 7% 10% Income Statement Sales EBITDA From Operations Earnings From Operations FD EPS From Operations 2010E 4.2x 7.16 2012E $8.4x 2011E 15. An additional 4. Met Coal .8x 9. and into Mexico.Rail With Option Value .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).2 Canadian Pacific Railway Company (CP) is one of seven Class 1 North American railroads and the second largest in Canada.4% 2012E 75.300 miles are located in Western Canada. 5.07 Balance Sheet Cash + ST Investments Current Assets PP&E Total Assets Current Liabilities LT Debt Total Liabilities Shareholders' Equity Q3/10 268 1.bout@cibc.6x 7.58 169 $11.0x 10.200 miles in Eastern Canada.768 746 $4.531 1.389 8.200 miles in the U.25 12.

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

S. 161 Bay Street.75 $8. CFA (416) 956-3807 Chris.000 seniors housing suites across Canada (~69%) and the U.70E 11.Institutional Equity Research Company Update January 17. Our 12.3M Yes Current 3-5-Yr.61A $0.Sturges@cibc. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Daily Trading Vol.6x 2011E AFFO.Maclean@cibc.69A $0. firstcall.75 or 13.3M Nil $605.7x 11. CIBC World Markets Inc. Reuters.8x 10.to 18-month price target is $9. Overweight 12-18 mo.UN-TSX (1/12/11) Key Indices: None NA $6.8M $0. with the remainder nursing care.5x 2011E FFO. increased investor demand and declining cap rates for seniors housing property. www. implying a total return of 27%.com .chartwellreit. Chartwell focuses primarily on the lighter-care formats of independent supportive living (57%) and assisted living (23%). We expect recovering occupancy (for CSH and the broader industry).ca All figures in Canadian dollars.. P.74E 13. Chartwell trades at 11. Toronto.000 $1. Rate 52-week Range Units Outstanding Float Avg. Investors should consider this report as only a single factor in making their investment decision.6x. Canada M5J 2S8 (416) 594-7000 Troy MacLean.3x 12.7% December $7.6M 140. See "Important Disclosures" section at the end of this report for important required disclosures.0x-13.65 144. CFA 1 (416) 594-7399 Brad. Brookfield Place.09 Chartwell Seniors Housing REIT owns and operates almost 24. Price Target CSH.2M Units 250.16-$9. CFA 1 (416) 956-3643 Troy.50 per Unit $1. (~31%).8% cap rate on current (in our view depressed) NOI. and strong growth in FFO.54 / 6. unless otherwise stated. Market Capitalization Distribution/Distr. Chartwell's current occupancy and income generation are below historical rates. MRICS 1 (416) 594-8179 Alex.ca Chris Girard. where applicable.59E $0. following credit crisis-driven pressure on the lighter-care retirement operating fundamentals over the past few years. AFFO Gr.63E $0. As a result.9x Stock Price Performance AFFO Per Share 2009 2010 2011 P/AFFO 2009 2010 2011 $0.730.S. Discount Valuation Present Unique Appeal $9.ca Find CIBC research on Bloomberg. We rate Chartwell REIT Sector Outperformer.ca Alex Avery. and trades at an implied 7.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. Brad Sturges. including potential conflicts of interest. We expect Chartwell could achieve a recovery of as much as 200 basis points of occupancy in 2011. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.7x 13.6x 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. 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. CFA. AFFO and NAV could drive Chartwell units higher in 2011.169. well below its large-cap Canadian REIT peer average of 14. Box 500.com and ResearchCentral.Girard@cibc. 2011 Stock Rating: Real Estate Sector Outperformer Sector Weighting: Chartwell Seniors Housing REIT Leverage To Recovering Occupancy.cibcwm.Avery@cibc.O.

(1/12/2011): $8.0% BC.0 $0.0% Ontario. INVESTMENT THESIS: SECTOR OUTPERFORMER ATTRACTIVE FULLY-COVERED YIELD: CSH yields 6. 5. VALUATION MULTIPLES REIT MANAGEMENT W.9% (6.0% 30.1 $124.5 $75.5X $9. CFA 12 .).1% n/a 15.9 $72.717 $26.75 Per Unit Unit Price . ThomsonOne and CIBC World Markets Inc 48 .UN-TSX) Stock Rating: Sector Outperformer Sector Weighting: Overweight Market Capitalization ($ mlns): $1.09 Per Unit Current Yield: 6.2% Q4 n/a 91. Discount Valuation Present Unique Appeal .8%) $0.1%) 2.7% 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 (52.18 month Price Target: $9.7% 97.74 17.70 18.50 8% 8.0 $0.9x 2011E 11.6x 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. CFA Chris Girard.409 Q3/09 $10. fully-covered by 2011E AFFO of $0.59 (14.63 3.70. LTC NOI (US$) Cdn Retirement NOI (Cdn $) Cdn LTC NOI (Cdn $) Total NOI (Local $) Q3/10 $9.9 million of the 2011 convertible debentures will be redeemed in December 2010. 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. Noonan .0% (52.194 $39.8%) Level of Care Independent Supportive Living.6% FFO MULTIPLES Chartwell Seniors Housing REIT AFFO MULTIPLES Chartwell Seniors Housing REIT 2009A 13. CFA Brad Sturges.1% 93.5% $0.President and CEO Vlad Volodarski . 26.7x 55.0% OCCUPANCY HISTORY (SAME-PROPERTY) Year 2010 2009 2008 Q1 90.January 17.7x 2011E 10.00% COMPANY DESCRIPTION Chartwell Seniors Housing REIT owns and operates a large (~24.4% 93.0% Assisted Living. where occupancy has eroded.1% $0.744 Change (8.0% Source: Company reports.0% Geographic Location Alberta.S.5 LEVERAGE SUMMARY LEVERAGE SUMMARY EBITDA Interest Coverage: D/GBV (w/o convertible debt): D/GBV (with convertible debt): Q3/10 1.1%) (0.S.2%) 2010E $0.3x 2009A 11.chartwellreit.S.9 $87.0% Quebec. concentrating on Ontario.Chief Financial Officer Richard J.9% Q3/09 89.9% Am ount $75.0% 65.7%.S.0 $64. which could drive considerable growth in FFO and AFFO into 2012 and beyond. The REIT is also considering acquisition growth in Canada moreso than in the U.25 Maturity May 1/12 COMPOSITION OF PORTFOLIO OF OWNED & LEASED SUITES (at Q3/10) Same-property Net Operating Income (NOI) U.2% 0.0% 90. 2011 Chartwell Seniors Housing REIT (CSH.4% 90.0 $240. 57.0x-13.8 $0.ca EARNINGS SUMMARY Financial Metric Funds From Operations YoY Change Adjusted FFO YoY Change 2009A $0. Melior and others.9% Series 2011 $115.74 13.5% ) 2011E $0.5 Alex Avery.75 27% $7.C. STRATEGY Chartwell is focusing on maximizing returns from its existing portfolio.7x 2010E 12. 23. Future acquisitions are likely to be one-off.2% 2010 YTD 15.S. Quebec.4% Lim it 60.Leverage To Recovering Occupancy.1% Change 50 bps -20 bps -20 bps USA.4%) 2009 30.9 * $0. Chartwell is winding down its joint-venture and mezzanine lending relationships with Spectrum.571 $25.3% Q3/09 1. 3.61 (22. in the future engaging in development activity for its own account.Chief Operating Officer www. Alberta and B. and the REIT may sell retirement homes in non-core markets.7% Q2 90. rather than large portfolios of properties. CFA Troy MacLean. Operations Q3/10 89. 20.8x 2010E 13. 25.1% 93.7% 61. which should be substantially resolved in 2011.3% $0.2% 93.4% Q3 90.3% 91.9% 88.000 suite) primarily retirement home focused seniors housing portfolio in both Canada (accounting for ~69% of suites) and the U. 39.69 (4.1% 89.8x 54.2% 98.0 Conversion $16.498 $3.2% 61. (~31%).4%) 0. Brent Binions .401 $39.169.8 5.3% Long-Term Care.756 $3. in-fill purchases.0 2012 $175. 7.0% SAME-PROPERTY OCCUPANCY Segment Canadian Retirement Canadian Long-Term Care U.0% CONVERTIBLE DEBENTURES (at Q3/10) Interest Rate 5.5% Issue $14.8 * $124. RESOLUTION OF LEGACY STRUCTURES: The REIT has made considerable progress working through legacy partnerships.0 $250.

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

60E 9.1% Source: Reuters All figures in Canadian dollars. Reuters. In addition. 2010. where applicable.240.049.60 / 6. Investors should consider this report as only a single factor in making their investment decision.3M Dividend/Div Yield $0. Key assets include Daylight's Cardium tight oil at Pembina (AB) and its natural gas resource plays at Elmworth (AB). and Bluesky formations.Chaw@cibc.82E 5. unless otherwise stated. Brookfield Place.4x Stock Price Performance Cash Dividend Per Share 2009 2010 2011 Cash-on-Cash Yield 2009 2010 2011 Company Description Daylight Energy Ltd.72E $0.cibcwm. A&D Execution Key To Refocused Asset Base Market Weight 12-18 mo. Montney.1x target multiple to our Risked NAV (vs. Other notable assets include its Belly River light oil play at Pembina (AB). firstcall.3%).76A $1.com and ResearchCentral.ca $0.50 $9. converted from a trust to a dividend-paying corporation on May 7. 161 Bay Street.0% 52-week Range $8.1% Fiscal Year Ends December P+P RLI (years) 11.40-$11. the average of 1.81 S&P/TSX Energy Trust. S&P/TSX Income Trust Composite Projected Total Return 36.daylightenergy. Canada M5J 2S8 (416) 594-7000 Jeff (Sizhuo) Shen 1 (403) 221-5047 jeff.0 2011 EV/DACF 6.1x). 1. www. Our price target of $13.1M Net Asset Value $12. As a result.000 Market Capitalization $2.95 per Shr Net Debt/CF 1.1x) with a 6. Toronto. 2009 2010 2011 P/CF 2009 2010 2011 Current $1.1% yield (vs.05 Monthly Avg. Cadomin. Box 500.5x (vs.8% 7. as we believe that investors are currently paying for little or none of Daylight's significant natural gas resource potential.3% 6. CIBC World Markets Inc.6x 6.. we would highlight Daylight as an excellent way to play natural gas defensively.com . Daylight trades at a P/Risked NAV of 76% and a 2011E EV/DACF multiple of 6.9M Distr.50/sh is based on a 1. P. See "Important Disclosures" section at the end of this report for important required disclosures. Price Target DAY-TSX (1/12/11) Key Indices: $13. averages of 94% and 9. including potential conflicts of interest. Frequency $0.7x 5.O. 2011 Stock Rating: Oil & Gas Royalty Trusts/Dividend Corporations Sector Outperformer Sector Weighting: Daylight Energy Ltd.ca Find CIBC research on Bloomberg. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.Kaliel@cibc. 10-105922 © 2010 Diana Chaw 1 (403) 216-8518 Diana.Institutional Equity Research Company Update January 17.ca Jeremy Kaliel 1 (403) 260-8657 Jeremy.46E $1. Potential near-term catalysts include year-end results/reserve reporting (expected in early March).5X Net Debt $665.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. which is prospective for the Nikanassin.68 Shares Outstanding 208.7X Convertible Available Yes Cash Flow Per Share We believe shares of Daylight represent excellent value at current levels. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.96A $0. the average of 5. Daily Trading Vol.shen@cibc. We would also highlight the possibility of Daylight striking a joint venture at Elmworth (AB) to develop its natural gas resource plays.

5 0. incl.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 .7x 8.50/share.760A $0.00/mcf Key Valuation Metrics vs.0x 0.4x 6.052A 40.1%) Position President & CEO VP. $$4. US$$90.0x 8. with a 12-18 month price target of $13. CFO Executive VP VP.93 2011E $50. 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$7.0x 10.5x 7.1x 9.46E $1.4 44. 3) Year operating netbacks divided by reported P+P FD&A cost.ca Diana Chaw (403-216-8518) Diana.5 11. (DAY . Finance VP. Exploitation Position VP.82E 42. 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 2.0 91.85 $30. Relative Valuation: Daylight is currently trading at a Price to Risked NAV ratio of 76% and a 2011E EV/DACF multiple of 6. Key Assets: Key assets include Daylight's Cardium tight oil at Pembina (AB).2x 11. with FX of $4. 5) Our base commodity price assumptions are US$$85.5x 9.97/mcf (2012E).97/mcf (long term) for AECO natural gas.7x $625 $280 (45%) Netback Analysis ($/Boe) Gross Revenue (net trans) Hedging Gains (Losses) Royalties Operating Costs Operating Netback G&A Interest Cap Tax/Other Cash Flow Netback Group avg Operating Netback Group avg Cash Flow Netback Name Randy Ford Steve Horner Pamela Kazeil Jerry Simpson 2010E $43. FDC $26.09 3 Cash Recycle Ratio 1.13) ($10.Kaliel@cibc. Cadomin.95/share (less forecast dividends of $0.97/mcf (2011E).75) $29.60/share) versus the group average of 1.1 162.1% Shares O/S(1): $208.0x 1. Reserves (MMBoe) Proved Developed Producing 43.38E 41.04 ($13.000 20.4x Pengrowth Vermilion Perpetual Bonterra 2.50/share is based on a 1. 4) Basic payout ratio is calculated total dividends (excluding the effect of DRIP) paid as a % of operating cash flow.ca Jeff Shen (403-221-5047) Jeff.2P.44) $23.16) $0. and inflows versus outflows is calculated as total CAPEX and dividends (including the effect of DRIP) as a % of operating cash flow.6 / mthly / 6. Coverage Group (CIBC Estimates) Share Price $9.3%).500E $0.50 Dividend (NTM) / Freq.35 USD/Cdn (2011E). and Bluesky formations.1x 8.000 Sector Outperformer Jeremy Kaliel. MBA (403-260-8657) Jeremy.000 25. and C$$0.8x 8.00 ($2.93 Daylight Group Average MANAGEMENT (Ownership: 3.59 $32.25 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. C$$0.2x Reserve Engineers: GLJ Petroleum Consultants Ltd.4x 8.000 30.Chaw@cibc. 6) Based on net capex including the effect of Alberta royalty credits.78 94% $94. 51 Pengrowth Progress Daylight Enerplus Average Trilogy Peyto ARC NAL Bonterra Trilogy Peyto ARC NAL $25 . We believe shares of Daylight represent excellent value at current levels. 2011 Daylight Energy Ltd.3% 2011E P/CF 5. total payout is calculated as total CAPEX and dividends (excluding the effect of DRIP) as a % of operating cash flow.230. Inflows4 200% 1.25) ($2.5x 2.1x.1x 9.9MM Market Cap.000 5. respectively) while providing a current yield of 6. C$0.050MM Average Trading Vol (50 day): 1.17) ($9. Operations VP.0x 2011E EV/DACF 6.150E $1.000 35. Outflow s (incl DRIP) Basic Pay out Ratio 112% 108% 108%108% 76% 77% Daylight Baytex Average 12.Years 8.75 $1.YOY) Reserves Growth (Per Share) 2P Reserves .YOY) (Mmboe) (boe/d) 2006A 2007A 2008A Q1 Q2 Q3 Q4 FY % Gas Production (Boe/d) CFPS (Basic) 2010E 2010E 2011E 2011E 39.75 75% 0.273A $0.1x 10.00 $18.00/bbl (2011E).0x 2 2.5 1.00 $24.00/bbl (long term) for WTI crude oil.1% 5.9x 9.5x (versus the group averages of 94% and 9.3 Proved + Probable (2P) 119.16) $0. Avg. Source: Company reports and CIBC World Markets Ltd. incl.5x 1 1. / Yield: $0.37 $25.3x 1.0x Payout Ratios 4.5 3.33A 42. and its natural gas resource plays at Elmworth (AB) which is prospective for the Nikanassin. Other notable assets include its and Belly River light oil play at Pembina (AB).37A $0.TSX) Current Price: C$9.01 ($2.2x 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.231 $16.000 40. as we believe that investors are currently paying for little or none of Daylight's significant natural gas resource potential. Montney.: $2.83 ($12.174 $22.5x 0 0.0x 3 3.5x 8. 2009A DEBT & OUTFLOWS VS.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.38A 42.000 10. In addition we would highlight Daylight as excellent way to play natural gas defensively. We would also highlight the possibility of Daylight striking a joint venture at Elmworth (AB) to develop is natural gas resource plays.5 50% 0.3x 9. INFLOWS D/CFDebt Metrics (DAY) D/CF (Group) VALUATION SUMMARY Outflows vs.000 15. Production NOTES 1) Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues). and US$$95.1x target multiple to our Risked NAV of $12.1x P/Core NAV 158% 181% EV/ EV/2P P/Risked Production Reserves NAV ($/Boe/d) ($/Boe) 76% $64.0 FD&A .1x.January 17.450E 57% 51% 5 2009A +Net Acq. Business Services VP.5 PDP % of Total Proved 56% 49% Total Proved % of P+P 65% 56% 2 2P Reserve Life .5 175% 1. and $$5. Our 12-18 month price target of $13.50 USD/Cdn (longterm).Shen@cibc.87 $1.MMboe (DAY) RPS Growth (DAY) RPS Growth (Avg) RELATIVE RISK & MAGNITUDE OF UNBOOKED PROSPECTS 30% 25% 20% 15% 10% 5% 0% -5% -10% (% change .81 12 To 18 Month Price Target: C$13. Potential Catalysts: Potential near term catalysts include year-end results/reserve reporting (expected in early March).4x11.81 Expected Return 44% 21% 2011E Yield 6.25 150% 1 125% 100% 0.68 Current Price PetroBakken Bonavista Vermilion Crescent Point Baytex Penn West CIBC Base Cmdty Prices US$50/bbl C$4.20 $27.A&D Execution Key To Refocused Asset Base .5 Total Proved (1P) 77. 2) Y/E P+P reserves divided by Q4 annualized production (Q4 2010E Production for 2010E).00/mcf Risked NAV Price Target 2005 2006 2007 2008 2009 2010E 2005 2006 2007 2008 2009 2010E 2011E EV/DACF (2011E) 6.1% (versus the group average of 5.00/bbl (2012E).ca SUMMARY & INVESTMENT THESIS Investment Thesis: We have a Sector Outperformer rating on Daylight Energy Ltd. FDC on a cash basis. PROPERTY OVERVIEW PRODUCTION & RESERVES GROWTH Production Growth (Per Share) Production (DAY) PPS Growth (DAY) PPS Growth (Avg) 45.85 USD/Cdn (2012E).00) ($2.

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

com Andrew Potter.0M Shrs 2. As a result. a significant discount to its peers. Canada M5J 2S8 (416) 594-7000 Kyle Balaux 1 (403) 216-3401 Kyle. Rate (E) 52-week Range Shares Outstanding Float Avg. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.0% $7.0M Nil $16.63 740.0M 735.ca Find CIBC research on Bloomberg. Brookfield Place. including potential conflicts of interest. Box 500. Reuters.98E $0. but given the still relatively weak outlook for natural gas in 2011 we expect growth to be more in the 7% range -. we believe it is a good time to buy EnCana.Large Cap Sector Outperformer Sector Weighting: EnCana Corporation JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011 $36.4x 30. Nick Lupick 1 (403) 221-5049 Nick. where applicable. peers.64 EnCana was a big laggard in 2010 as weak gas fundamentals more than trumped the company's strong production growth.064.Balaux@cibc.still at the high end of Canadian comparables' growth rates and in line with U.7% December $38.62A $0. Over the long term.00 $29.67E 3. For EnCana to outperform. 3) a recovery in natural gas prices.Lupick@cibc. we believe EnCana has the capability to grow 10%+ per year. 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 $4.2x 4. 161 Bay Street.Potter@cibc. we believe there is substantial room for the valuation to re-rate to historical levels.O. CIBC World Markets Inc. Price Target ECA-NYSE (1/12/11) Key Indices: Toronto.6M $0. Toronto. Investors should consider this report as only a single factor in making their investment decision.Institutional Equity Research Company Update January 17. ECA trades at only 77% of our risked NAV estimate and at 6. we need to see some combination of: 1) EnCana landing a large joint venture (reduces capex burden and depicts value). Given the weak performance in 2010 and the stock's near-record-low valuation.2x Source: Reuters All figures in US dollars.41 per Shr 4. NYSE NM $26.com and ResearchCentral. EPS Gr.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.21E $5.87E 6.encana.624 $21.2x 34.cibcwm.ca $9.8x 5. CFA 1 (403) 221-5700 Andrew.com .933. firstcall.29A $6. unless otherwise stated. and/or.885.0M No Current 3-5-Yr. See "Important Disclosures" section at the end of this report for important required disclosures.S.02-$35. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. P.ca CIBC World Markets does and seeks to do business with companies covered in its research reports.. www. We believe all of these events are likely.80 / 2. As the market regains confidence in ECA's strategy/asset quality.4x 2011E EV/DACF. Market Weight 12-18 mo.844. 2011 Stock Rating: Oil & Gas . 2) a growth strategy that balances capex and cash flow. Daily Trading Vol.

48 $4.332 2.97 2012E 1.7x 4.3x 6.033 $8.7x 24.02 $75.30 US$4.7x 54 .00 $0.183 $4.300 590 96% 0% 7% 2011E $1.US$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 .313 0.477 4.855 1.0x 16.January 17.1x 15.7% Kyle Balaux.428 $824 $36 ($49) ($3.264 92% $555 2014E $6.616 3.6x 6.00 $94.282 Total Risked NAVPS .090 $1.97 2011E 1.060 3.945 107.408 1.010 28.5x 5.509 $6.727 $4.ca Nick Lupick.4x 7.187 22. Sector Outperformer Analyst: Andrew Potter.774 19.459 $4.805 0 41.88 2009 1.94 $3.720 11.1x 4.02 $75.99 US$9.319 1.00 $5.26 $1.12 $69.805 $2.159 100% $18 2011E $7.23 $0.607 0.07 $74.97 2015E 2.405 735 2.194 2.41 P/NAVPS (Risked) 77% 94% Target P/NAVPS (Risked) Total Unrisked Asset Value $51.00 $89.64 740 $21.921 12.35 US$9.% Financial Statistics .bbl/d United States Oil & Liquids Production .3x 2013E US$95.611 90% $489 2012E $6.00 $0.617 $2.479 $28.464 $0 $42 ($3) ($403) $668 $4.000 10.5x 41.mm Average Trading Volume (50 Day) Annual Dividend / Yield Note: All company figures are in USD unless stated otherwise CIBC Deck NYMEX WTI (US$/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 .854 3.9% $70.67 $637 $0.2x 2015E 3.97 2013E 1.45 $6.983 686 84% 4% 2010E US$79.163 13. CFA Ph: (403) 221-5700 E-mail: Andrew. Ph: (403) 216-3401 E-mail: Kyle.2x 2009 6.546 2009 $5.85 US$9.$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.878 732 95% 0% 11% 2013E $3.064 1. Ph: (403) 221-5049 E-mail: Nick.00 Target Return: 21.820 $9.928 Total Unrisked NAVPS .00 $84.386 15.386 ($341) $332 $6.9x 2010E $2.3x 36.02 $75.959 $2.948 2.00 $5.0x 4.40 US$4.ca 2010E $29.671 25.927 $0 $42 ($3) ($434) $461 $5. NYD) Current Price: $29.100 $6.00 $1.bbl/d SAGD Oil & Liquids Production .99 $66.358 $6.882 $2.$M Float .4x 2014E US$95.2x 2011E 6.471 66.237 $7.172 13.Potter@cibc.098 113% ($589) 2010E $6.50 US$9.1x 14.8x 0.97 2014E 2.614 $3. 2011 Encana (ECA-TSX.22 US$6.29 $3.013 $2.621 0 29.926 $6.64 Price Target: $36.4x 0.2x 12.067 84% $966 2013E $6.87 $4.20 $5.80 / 2.768 $0 $25 $1.479 1.984 $9.337 11.ca Net Asset Valuation .98 $5.bbl/d Oil & Liquids (bbl/d) Production .53 P/NAVPS (Unrisked) 42% Target P/NAVPS (UnRisked) 51% 2009 US$61.3x 0.6x 2012E US$90.00 $0.842 9.793 659 95% 0% 12% 2012E $2.172 10.838 0 23.22 US$6.624 $0.50 US$9.736 $2.678 5.360 $10.688 817 95% 0% 12% 2014E $4.6x 12.75 $4.4x 7.67 $0.Lupick@cibc.MBoe/d Natural Gas % Oil Sands % Production Growth Per Share .21 $725 $0.JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011 .2009 Total Risked Asset Value $28.8x 0.23 US$5.1x 2009 $4.303 2015E $5.300 0 25.604 $3.978 3.321 0.438 78% $1.37 $3.00 $94.0x 14.665 1.93 $1.61 US$3.968 877 95% 0% 7% 2015E $4.mmcf/d Natural Gas (MMcf/d) Canadian Oil & Liquids Production (excluding FC & CL) .00 $5.55 $67.7x 0.057 82% $1.97 2010E 1.0x 0.19 $1.239 4.$mm Enterprise Value .844.122 $0 $42 ($3) ($537) $0 $7.% Free Cash Flow Debt Analysis Net Debt .2x 35.22 US$6.2x 31.0x 20.713 2.2x 2010E 6.00 $0.909 $6.99 US$8.9x 0.541 0 33.56 $6.2x 2014E 4.338 $4.42 $58.7x 2015E US$95.25 $4.00 $94.$M Net Debt .5% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .680 552 96% 0% 2011E US$85.767 0 38.Balaux@cibc.436 $0 $42 ($3) ($576) $0 $8.178 $5.695 $6.070 $4.317 29.093) $0 $6.5x 14.288 1.62 $5.51 $77.9% $38.2x 2012E 5.746 $0 $42 ($3) ($481) $0 $6.2x 2013E 4.729 $5.00 $0.50 US$9.

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

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. Rate (E) 52-week Range Shares Outstanding Float Avg.cibcwm. 2010 2011 2012 P/E 2010 2011 2012 Excludes Rite Aid.2x 12.1M Shrs 425. Earnings will be not much more than flat this year.4% equity stake in Rite Aid.3x 12.8M Nil $558. Jean Coutu remains a relatively inexpensive.50 $9.com and ResearchCentral. Investors should consider this report as only a single factor in making their investment decision.30 3-5-Yr. Over the next 12 months. Mark Petrie. Canada M5J 2S8 (416) 594-7000 Eric Balshin 1 (416) 956-6108 Eric.Balshin@cibc. We would be surprised if PJC was not an active participant.88-$10.. where applicable. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. As a result.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. However. www. Reuters.Petrie@cibc. its strong buying practices.Institutional Equity Research Company Update January 17. $0.76E $0. Toronto.39 per Shr 31.com .70A $0. Its expertise in front-store merchandising.O.22 / 2. one of the largest pharmacy chains in the U. Low Price.S. its narrow focus and its good franchisee relations might make Coutu a welcome addition to the national scene.jeancoutu. P.Caicco@cibc. and possibly a few Quebec deals as pharmacy economics make size and scale more critical attributes.24 233. See "Important Disclosures" section at the end of this report for important required disclosures. Good Position Market Weight 12-18 mo. unless otherwise stated. Jean Coutu is also well positioned to participate in national drugstore consolidation.4M 111.6M $0.2x Stock Price Performance Source: Reuters Company Description Jean Coutu is the largest drug retailer in Quebec and owns a 28. firstcall. 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. 161 Bay Street. well-positioned drugstore chain with numerous opportunities for growth. 2011 Stock Rating: Merchandising Sector Outperformer Sector Weighting: Jean Coutu Group (PJC) Inc. CFA 1 (416) 956-3278 Mark.ca Find CIBC research on Bloomberg. we expect at least one sizeable national transaction. EPS Gr. including potential conflicts of interest. CIBC World Markets Inc.com Perry Caicco 1 (416) 594-7279 Perry. Price Target PJC.1M No Current $11. and Quebec drug reforms will drag a bit on growth in the following year.4% February $2.ca All figures in Canadian dollars.800 $2.170. Brookfield Place. paying reasonable prices. Box 500.76E 13.9% $219. Daily Trading Vol.A-TSX (1/12/11) Key Indices: None NM $7.

4 Management Jean Coutu Francois J.6 923.6 75.0 0.15 398 2. 2011 Jean Coutu Group Inc.30 0.4% 23.9% 2.08 8.2 7.5% 1.Balshin@cibc.282.6 219.05% 3.2 0.8% 6.0 48.880.298.6 285.7 18.3x 14.8 7.6% 6. RAD) Shoppers US peers 8.8% 4.61% 7. CAD PJC shares o/s Net Debt (Cash) PJC Canada EV.0 5.01% 217.014 1.2 1.4 636. but the impact is one-time.9 179.2 0.08 12.41% 14.3 6.6) $ 2.01 (0.6 $ 1.7 6.0 0.30 $ 0.4 341.7 254.21 $ 233.7x 28.5x 8.4 244.053.3x 14.4 128.50 All figures in millions except per share data Sector Outperformer Perry Caicco (416-594-7279) Perry.7 F2012e 26. in CAD F2012E 9. Coutu Andrew Belzile Alain Lafortune Normand Messier Chairman President and CEO EVP.Low Price.20 $ 233.7x 9.3 7. in CAD EV/ Next 12m EBITDA.16 $160.3% 1.0 $ 269.A-TSX) Current Price: C$9. Purchasing and Marketing EVP.ca Investment Thesis Comparable Analysis LY P/E ratio Jean Coutu (ex .19 236. Bloomberg and CIBC World Markets Inc. Good Position . 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.337.1 945. Longer-term.5 614. CFA (416-956-3278) Mark.7 2.370.27 424 3.9 699.0x $ # of Shares 252.74% PJC Canada price per share.9x Key Ratios TY NY ROE ROA After-Tax ROIC Current Ratio Net Debt/EBITDA Net Debt/Capital BV/Share FCF F2010 34.05% 4.7x 26.591.2 13.1 $ 2. RAD Loss # of Shares O/S.8% 597.3% 16.3 47.3 2.2 $ 131.22 $ 227. Y/Y Sq.9% 17.2 Price/Share Rite Aid stake Sub-Total Net (Debt) Cash Total Pre-Tax Realizable Value Note: Conversion to CAD$ at Current Spot Rate of: $ 0.6 1.F2012E NAV Q3/F11 Review Actual Estimate Q3/F10 CDN Operations $ EBITDA F2012E 277.2 7.58% 17.7x 7.8 2.0 0.5 43.6 677.543.76 $ 233.4x 8.22 228.8% 611.2 616.4 111.1% 3.3 8.97% 12.7 268.1% -3.2 $ (149.9 953.1 3.390.36 USD/CAD Coutu Calculator Next 12m PJC/A current share price.4x 12.0 678. drug reimbursement policies in Quebec will trim the company's earnings.5 13.4 3.4 F2011e 31.647 6. PJC is well-positioned to make sizable acquisitions outside of Quebec.08 $ 8.0 $ 246.355.8 2.9 0.5 7.9 511. and owns a growing generic drug manufacturing business.99 Value/Share CAD 10.3 PJC is the dominant drugstore chain in Quebec.38% 55.3% 2.6% 1.9 277.8% 15.4 19.5x 0.5 173.49 $157.5x 8.7x 0.8% 579.8 76.5% 22.7% -1.0 0.4 -55. USD Current USD/CAD exchange rate Value of RAD per PJC share.7% 0.6% 2. Affairs EVP.4 $ 7.14% 14. 57 Forward EV/EBITDA $15 .014 1.1 13.0% 0.2% 0. New Store Development F2010 F2011e F2012e Total Store Count Estimated Sq.Petrie@cibc. Ft Increase Avg Store Size (Thousands) 370 2.2 71.0 0.9% $3.8 0.6x -0.6 -4.76 228.19% 248.112 7.5% $2.8% 1. Diluted $ 473.7 244.6 74.4 0.3 -0. (PJC.6x 12.592.892 9.30% 3.26% 7. PJC PJC.0 $ $ $ $ $ CAD 2.741.3 2.99 1.6 343.85% 4. Ft.7% 20.1 9.9 165.1 62.a share price.98% 3.14% 19.4 7.5 66.1 $ 2.5x 17.0% -3.025.2 0.6 2.5% 6.6 6.2 74.99 $ 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.765.014 1.5 8.395.2 5.30 12.6x 13x 11x 9x 7x 5x Rite Aid share price.495.4x 7.338.0 0.4 123. Drug reform in Quebec continually weakens independents and puts PJC into a stronger position for acquisitions.9 7.389.6x 15.4% 0.ca Mark Petrie.7% 2.2% 2.1 8.Caicco@cibc.To 18-Month Price Target: C$11.66) 11. Finance and Corp.22% 7.1 5.637.0x 13. Over the next few months.3 20. CAD $ $ $ $ $ $ $ 9.0% 0.1 62.93 Multiple Value 9.70 $ 236.2x 14.34 Market Information Shares Outstanding Float Market Capitalization Net Debt Enterprise Value $ 233.4 348.9x 0.2 $ 2.8 6.583.1 1.2 502.2% $2.33% 231.9 13.0x 8.3% Valuation .9 13.490.8 $ 2.2 Share price 4.9 13.0% 1.RAD) Shoppers US peers EV/EBITDA Jean Coutu (ex.1 277. CAD PJC Canada EBITDA estimate PJC Canada EV/EBITDA $20 Current EV/Next 12m EBITDA 7.2x 12.39% 17.95% 59.1 5.5x 14.170.53% 57.ca Eric Balshin (416-956-6108) Eric.7 62.January 17.6 2.7 3.7 3.6 $10 $5 $- Source: Company reports.2 1.2 149. CAD RAD current share price. Pro Doc) Other Revenue Total Revenue 6.7x 8.01 $155.0 177.

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

Institutional Equity Research Company Update January 17. where applicable.8x 9. with the added prospect of finding high-grade mineralization where the hit ratio has been >80%.cibcwm.10E Current $22. Long-term prospects for continued reserve growth are strong. CIBC World Markets Inc.30A) $0. given KGI's control of most of the key ground where it operates. With two sources of ore.klgold.19 68.com and ResearchCentral. including the high-grade South Mine Complex.72 3-5-Yr.34 per Shr NM NA Nil $159. unless otherwise stated. Brookfield Place. annual level within two years. Box 500. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Daily Trading Vol. Rebuilding In A Classic High-grade Camp Overweight 12-18 mo. is an operating gold mining company located in Canada. The company's flagship mine is the Macassa Mine located in Kirkland Lake.1x 13.. Ontario.ca Khaled Sultan 1 (416) 594-7297 Khaled. Rate (E) 52-week Range Shares Outstanding Float Avg. CIBC World Markets does and seeks to do business with companies covered in its research reports. P.4M No ($0. www. Drilling continues to intersect mineralization that is among the highest concentrations in the world. firstcall. Canada M5J 2S8 (416) 594-7000 Barry Cooper 1 (416) 956-6787 Barry. See "Important Disclosures" section at the end of this report for important required disclosures. We think KGI trades at attractive multiples relative to its upside potential for growth in production as well as reserves. 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. 2011 Stock Rating: Precious Metals Sector Outperformer Sector Weighting: Kirkland Lake Gold Inc.25-$16.Sultan@cibc.O.003. Investors should consider this report as only a single factor in making their investment decision. the build-out of production won't be constrained by ore availability. 161 Bay Street. Production plans remain on track for growth to the 200.ca Find CIBC research on Bloomberg. We foresee prospects for expansion beyond these figures and delivery of production will be the key driver for share price performance. which should vault KGI into intermediate producer status. Toronto.0M Shrs 260. with results that are reminiscent of the Red Lake mine. The company's shares offer good leverage to gold price movements.53A $1.000 oz. including potential conflicts of interest. Price Target KGI-TSX (1/12/11) Key Indices: None NM $6.6x Source: Reuters Company Description Kirkland Lake Gold Inc.30E $1. 2010 2011 2012 P/E 2010 2011 2012 NM 49.Cooper@cibc.com All figures in Canadian dollars. EPS Gr.000 $1. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.53E NM 27.6M Nil / Nil April $2.com .21A) $0.2M 67. Reuters.4x Stock Price Performance Cash Flow per Share 2010 2011 2012 P/CF 2010 2011 2012 ($0. As a result.00 $14.

9 x build-out of production will not be constrained by stope availability once the expansions are complete Large Cap Average (>$10B) 1.4 x 2.7 x 39.6 x 19.47 0.344 $9.4 x 2.016 $9.8 x 109.4 x 1.5 x mineralization that is among the highest concentrations in the world.1 (416) 956-6787 .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 $6.64 2.0 x 21.6 x 4. Barry Cooper .269 146 $631 1.US$ 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 0.00 0.2 x 1. The high-grade nature of the new South Mine Complex offers up some interesting Mid Cap Average ($2B-$10B) 1. With two major source areas for gold.9 x 17.4 x 2.4 x 1. the North American Average 1.6 x 20.4 x 22.5 x 2.3 x 2.D&A.ca Khaled Sultan .9 x 2.Sultan@cibc.0 x 48. yr 2011@ US$1600.7 x 2. 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.0 x 1.Rebuilding In A Classic High-grade Camp .397 2.0 x 2.21 63 $1.203 $5.Khaled.5 x 2.8 x 15. Reclamation S.9 x 2.2 x 4.2M oz 2.7 x 26.5 x 15.ca All figures in C$ million.6 x 2.300 3.100 $1.63 100% 100% 5% 577 50 671 8.000 2. We believe that as production is Large Cap Average > 1M oz 1.79 Source: Company reports and CIBC World Markets Inc.000 $1.3 x realized the market will recognize that this camp is worthy of similar multiples afforded operations in Intermediate Producers 0.300 1. The company continues to intersect gold Small Cap Average (<$2B) 1. 60 .541 $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 1.30 0.100 $1.0 x 1.1 x Risk Adjusted Discount P/NAV P/NAV P/NAV $1.21 68 Production* Cash Costs** 2P M&I 146 631 1. 2011 Kirkland Lake Gold KGI-TSX Date Share Price Rating Target January 12.2 x 40.2 x 2.US$ 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 $1.2 x 1.9 x 1.7 x 18.3 x 2.2M oz * Proven & Probable Reserves Income Statement Gold Price Assumptions US$ Production (000s ounces) Cash Costs US$/oz Capital Expenditures Revenues Expenses Operating Expenses D.0 x 9. P/NAV Sensitivity Avg.0 x 3.4 x 2. Gold price assumption in yr 2010 @ US$1225.5 x Red Lake where market multiples are high.53 68 F2013E $1.8 x 1.0 x 28.200 Ownership Discount Rate US$ Millions 43 Per Share 0.2 x 37. Gold Px .10 1.6 x 33.4 x NEG 26. 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 16.3 x 24.5 x 2.72 Sector Outperformer CAD 22.400 $1.2-1 M oz 1.7 x 16.225 93 $720 $58 $121 71 8 3 6 87 34 11 23 0.6 x 2.53 68 F2012E $1.8 x 2.83 0 3 3 667 0.403 $8.2-1 M oz Small Producers < 0.134 $34 $52 57 4 3 5 68 -17 0 -17 -0.05 9.742 $8.4 x 2.085 ** Reserves and Resources F2010A $975 45 $1.January 17.2 x 3.9 x 501.US$ 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 0.1 x in a few years.7 x 2.200 $1.3 x 1.600 146 $647 $32 $246 99 16 4 6 125 121 40 80 1.5 x 1.6 x 1.0 x 1.9 x 1.5 x 2.05 0.2-1 M oz Small Producers < 0.4 x 2.2 x 27.8 x 172.5 x 73.9 x 3.8 x 3.3 x 3.4 x 2.1 (416) 594-7297 .0 x 3.2M oz EV Statistics .7 x 38.397 2.G&A Exploration Total Expenses Income Before Tax Income Taxes Net Income EPS CFPS Shares Outstanding P/NAV $1.5 x 1.700 185 $625 $32 $332 122 20 5 6 153 178 60 118 1.269 2P: Modeled Proven & Probable Reserves (000s oz) M & I: Modeled Measured + Indicated Resources (000s oz 1.8 x 19.8 x 18. 2011 CAD 14.3 x 49.73 9.5 x 2.Barry.2 x EV/2P* $683 $834 $495 $652 $882 $525 $557 $1.30 -0.9 x than when it operated for 65 years in the mid to late 1900s. KGI offers good leverage to gold price movements with Small Producers < 0.9 x the added prospect of finding high-grade mineralization. unless otherwise stated.8 x NEG 54.0 x 1.9 x 2.9 x 2.000 $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 .7 x 1.8 x prospects for grade enhancement at the mine.2 x 49.916 $9.Cooper@cibc.00 Source: Company reports and CIBC World Markets Inc.9 x 5% Discount P/NAV P/NAV $1.6 x 2.6 x 13.7 x 14.

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

Reuters.04 per Shr Net Debt/CF 1..08E $0. averages of 94% and 9. 10-105922 © 2010 Diana Chaw 1 (403) 216-8518 Diana. Key assets include NAL's Cardium tight oil at Garrington & Cochrane (southern AB) and its conventional Mississippian light oil play (southeast SK). 161 Bay Street.shen@cibc.9M Net Asset Value $15. 2009 2010 2011 P/CF 2009 2010 2011 Current $2.ca All figures in Canadian dollars.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. NAL is our top pick for yield-focused investors. Price Target NAE-TSX (1/12/11) Key Indices: $16.nal. Frequency $0. CIBC World Markets Inc.0x (vs.5% Source: Reuters Company Description NAL Energy Corporation converted from a trust to a dividend-paying corporation on December 31.cibcwm.87E $2.15A $1.9x). Toronto.0 2011 EV/DACF 7. the average of 1. 450. the average of 5. As a result. Brookfield Place.84 / 6. Daily Trading Vol.5% yield (vs.1x). 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. Investors should consider this report as only a single factor in making their investment decision.5% Fiscal Year Ends December P+P RLI (years) 11. and a strong balance sheet.O.95 Shares Outstanding 146.12A $1.6% 8.0X Net Debt $496.15E 6.07 Monthly Avg.Chaw@cibc. the average of 1.7M Dividend/Div Yield $0. where applicable.1x) with a 6. www. the average of 5.com and ResearchCentral. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.6M Distr.Institutional Equity Research Company Update January 17. NAL trades at discounted P/Risked NAV of 87% and a 2011E EV/DACF multiple of 7. 2010. S&P/TSX Income Trust Composite Projected Total Return 29. after mkt.84E 8.1x target multiple to our Risked NAV (vs. its Wabamun oil asset (AB). firstcall.1x Stock Price Performance Cash Distribution Per Unit 2009 2010 2011 Cash-on-Cash Yield 2009 2010 2011 $1. after mkt.3%).). attractive Cardium acreage. unless otherwise stated.00 $13. Box 500.00/sh is based on a 1. the average of 122%) and a 2011E D/CF ratio of 1.02 S&P/TSX Energy Trust.3%). and its Doig gas play (northeast BC).5% yield (vs. Our price target of $16.68-$14. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.0x 6. Potential near-term catalysts include 2011 guidance and an operational update (expected January 25.5x (vs. See "Important Disclosures" section at the end of this report for important required disclosures. including potential conflicts of interest. We believe NAL's track record of operational execution bodes well for the upcoming update.1x 7. P.). Canada M5J 2S8 (416) 594-7000 Jeff (Sizhuo) Shen 1 (403) 221-5047 jeff.ca Find CIBC research on Bloomberg.3% 52-week Range $9.5X Convertible Available Yes Cash Flow Per Unit With a 6.000 Market Capitalization $1. as well as year-end results/reserve reporting (expected March 9. Other notable assets include its Viking light oil play at Provost/Irricana (AB).908.3% 6.ca Jeremy Kaliel 1 (403) 260-8657 Jeremy.com .Kaliel@cibc. Supporting its yield is a total payout ratio of 107% (vs.

00/mcf CIBC Base Cmdty Prices US$50/bbl C$4.5x 1 1. NAL is our top pick for yield focused investors.87 3 Cash Recycle Ratio 1.0x 2011E EV/DACF 7.: $1.27) ($0.26) ($0.000 20.Years 11.87E $2. respectively) while providing a current yield of 6.5 0.174 $22.9x 9. Avg. 3) Year operating netbacks divided by reported P+P FD&A cost.35) ($11.).50) ($2.97/mcf (2011E).00/share is based on a 1.7x 1.3% 2011E P/CF 6. and inflows versus outflows is calculated as total CAPEX and dividends (including the effect of DRIP) as a % of operating cash flow. Koyanagi 2010E $45.000 30. its Wabamun oil asset (AB).000 25.2P. Our 12-18 month price target of $16. attractive Cardium acreage.0x 0. With a 7% yield (vs.50) ($2.75 75% 0. US$$90. INFLOWS D/CF (NAE) VALUATION SUMMARY Outflows vs.1x 10. 2011 NAL Energy Corp.68 PetroBakken Bonavista Penn West US$100/bbl C$7.50 USD/Cdn (longterm). and its conventional Mississippian light oil play (southeast SK). FDC on a cash basis.1x 8.000 5.2x Reserve Engineers: McDaniel & Associates Consultants (MMboe (boe/d) DEBT & OUTFLOWS VS.1x target multiple to our Risked NAV of $15. Steeves 2010E 2011E $269 $318 ($210) ($215) ($155) ($124) $23 $21 ($73) ($1) $38 $36 $234 $237 $195 $195 $467 $468 1. FDC $27.0x (versus the group averages of 94% and 9.5x 0 0.2x Progress Peyto ARC Bonterra NAL Group Group Avg.43A $0. with a 12-18 month price target of $16.611 $23.0x 2.January 17. and evidences its high-quality asset base. 2) Y/E P+P reserves divided by Q4 annualized production (Q4 2010E Production for 2010E).20 $27.93 2011E $51.5% 5.5x 2 2.37 $25. We believe NAL’s track record of operational execution bodes well for the upcoming update.4x11.C. Reserves (MMBoe) Proved Developed Producing 60. Inflows4 175% 1. C$0.000E 52% 50% 5 2009A +Net Acq.5 150% 1. and $$5.00/bbl (2012E).ca Diana Chaw (403-216-8518) Diana. Operations & COO VP. as well as year-end results/reserve reporting (expected on Mar.YOY) RELATIVE RISK & MAGNITUDE OF UNBOOKED PROSPECTS Q1 Q2 Q3 Q4 FY % Gas Production (Boe/d) CFPS (Basic) 2010E 2010E 2011E 2011E 30. 63 Pengrowth Vermilion Crescent Point Baytex Daylight Enerplus Average Trilogy Peyto ARC NAL .5x 3 3.1x 8.00/bbl (long term) for WTI crude oil.28) ($11.5x 7.3%).15E 31.1x 9.6MM Market Cap. 6) Based on net capex including the effect of Alberta royalty credits.3%). $$4. Outflow s (incl DRIP) Basic Pay out Ratio 112% 105% 108% 108%108% 76% 77% 83% Risked NAV Price Target Crescent Point Progress Daylight Penn West PetroBakken Baytex Bonavista Perpetual Enerplus Average Pengrowth Vermilion Perpetual Bonterra Trilogy 12.5 50% 0.8x 8.93 NAL Group Average MANAGEMENT (Ownership: 0. PROPERTY OVERVIEW PRODUCTION & RESERVES GROWTH Production Growth (Per Share) Production (NAE) PPS Growth (NAE) PPS Growth (Avg) 35. Key Assets: Key assets include NAL’s Cardium tight oil at Garrington & Cochrane (southern AB).ca SUMMARY & INVESTMENT THESIS Investment Thesis: We have a Sector Outperformer rating on NAL Energy Corp.4 Proved + Probable (2P) 103. 25th.85 USD/Cdn (2012E).86/share) versus the group average of 1.Shen@cibc.3x 9.02 Expected Return 29% 21% 2011E Yield 6.13 ($1.TSX) Current Price: C$13. Other notable assets include its Viking light oil play at Provost/Irricana (AB).92 $2. Potential Catalysts: Potential near term catalysts include 2011 guidance and an operational update (expected on Jan. Wiswell Keith A.0 9.2%) Position President & CEO VP Finance & CFO Position VP.0x 8.000 Sector Outperformer Jeremy Kaliel.5 60.610A $0. after mkt.). incl. Year CF) Total Credit Facility (Current) Facility Utilized (Current) Name Andrew B. and C$$0.97/mcf (2012E). and US$$95.000 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 . and a strong balance sheet. incl. 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 6.5% (versus the group average of 5.1x 9.0 PDP % of Total Proved 85% 85% Total Proved % of P+P 69% 69% 2 2P Reserve Life .5% Shares O/S(1): 146.7x 8.909MM Average Trading Vol (50 day): 450.07 $32.97/mcf (long term) for AECO natural gas. and its Doig gas play (northeast B. MBA (403-260-8657) Jeremy.53A 29.0x 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. (NAE .25 $1.00/share.36 94% $94.2 FD&A .16 ($9. McDougall John C. Relative Valuation: NAL is currently trading at a Price to Risked NAV ratio of 87% and a 2011E EV/DACF multiple of 7.1x.48E 30.00 Dividend (NTM) / Freq.4x 6.000E $1.5 1. the average of 5.35 USD/Cdn (2011E). 4) Basic payout ratio is calculated total dividends (excluding the effect of DRIP) paid as a % of operating cash flow.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.25 125% 1 100% 0.04/share (less forecast dividends of $0.5x $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. Source: Company reports and CIBC World Markets Ltd.MMboe (NAE) RPS Growth (NAE) RPS Growth (Avg) 25% 20% 15% 10% 5% 0% -5% -10% -15% (% change .000 10.31) $28.55 $30.84 / mthly / 6.00/bbl (2011E). total payout is calculated as total CAPEX and dividends (excluding the effect of DRIP) as a % of operating cash flow. 5) Our base commodity price assumptions are US$$85.25 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 3.4 71.Cardium First Mover Our Top Higher-yielding Pick .Kaliel@cibc. / Yield: $0.120A $0.000 15. Business Dev NOTES 1) Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues).0x 1. with FX of $4.1x.52) $24.473A 30.5x 8.26 ($8.00/mcf Key Valuation Metrics vs.2x 11.).1x P/Core NAV 183% 181% EV/ EV/2P P/Risked Production Reserves NAV ($/Boe/d) ($/Boe) 87% $77.5 2.0x 9. Coverage Group (CIBC Estimates) Share Price $13.0x 10.00) $28.Chaw@cibc.84 ($1. 9th. after mkt.00) $32.YOY) Reserves Growth (Per Share) 2P Reserves .ca Jeff Shen (403-221-5047) Jeff.796E $0. C$$0.41A 29.0 103.02 12 To 18 Month Price Target: C$16.5 Total Proved (1P) 71.

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

the highest in our coverage universe.25 $31. where applicable.3M 89. 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. Toronto. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. 2011 Stock Rating: Multi-Industry Sector Outperformer Sector Weighting: Onex Corporation Expecting NAV Growth To Accelerate And NAV Discount To Narrow $40. Rate (E) 52-week Range Shares Outstanding Float Avg.92A ($0. 3) additional fees are earned from new funds.O. Onex trades at a 12% discount to NAV.. Canada M5J 2S8 (416) 594-7000 Paul Holden.708.ca Find CIBC research on Bloomberg. Brookfield Place.3M Shrs 230.4x Stock Price Performance Source: Reuters Company Description Founded in 1984.0M No $0.onex. Market Weight 12-18 mo.02-$31. Current trends suggest that those two factors are heading in the right direction for Onex. CIBC World Markets does and seeks to do business with companies covered in its research reports.com and ResearchCentral. Box 500.cibcwm. Price Target OCX-TSX (1/12/11) Key Indices: Toronto NM $24. unless otherwise stated. 2) the rebound in manufacturing activity takes hold.65 118. IPO conditions are improving with rising equity markets and there are many corporations and private equity firms flush with cash. 4) recently invested cash starts to earn a return.03E Current 3-5-Yr.000 $3.com .11 / 0.59 per Shr NM $513. 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. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.35 We believe that Onex's NAV growth will accelerate in 2011 as: 1) conditions for monetization opportunities become more attractive. firstcall. 34.7M $0. Our $40.4%. Investors should consider this report as only a single factor in making their investment decision. CFA 1 (416) 594-8417 Paul.com All figures in Canadian dollars.Cheng@cibc. See "Important Disclosures" section at the end of this report for important required disclosures. The greatest risks to our call are a collapse in manufacturing activity and a lack of appetite for IPOs. including potential conflicts of interest. and. Daily Trading Vol.25 price target implies a return to target of 28. As a result.540. P. 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 2010.1x NM 30.Holden@cibc. Onex Corporation is one of North America's oldest and most successful private equity and alternative asset managers. www.00M Nil $1.Institutional Equity Research Company Update January 17. We are of the opinion that the discount to NAV should narrow as well. 161 Bay Street. CIBC World Markets Inc.4% December $35.ca Kevin Cheng. CFA 1 (416) 956-6676 Kevin. EPS Gr.17E) $1. Reuters.

33 4. The economics for Onex Corp.8 8.92 0.0 470.78 0.50 2.97 0. CFA (416-594-8417) Paul.447 97 97 211 80 513 4.69 0.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.2% 2011E 38.8x 10.70 0.2% C$31. Onex Corp is currently trading at a discount to NAV of 11.cheng@cibc. This ability to create value and grow NAV warrants a valuation that is at a premium to NAV.42 190 170 39 48 765 Value at Owned 4.10 0.6 17.Expecting NAV Growth To Accelerate And NAV Discount To Narrow .61 2.12 0.January 17.6 250 191 244 191 175 133 109 113 59 354 267 21 2.99 2. 2011 Onex Corp.To 18. The management of third-party capital also produces management fees and the potential for carried interest.9 31.5 340 619.3 4.34 $35.48 1.37 0.78 0.68 4.42 9.59 31. having produced a 29% IRR since 1984.holden@cibc. are better today than at any time in the past due to the growing stream of management fees and its share of carried interest in the company's largest fund to date. Unrealized carried interest Total Public Companies LTM NAV: Private Companies & Other Sitel Worldwide Allison Transmission Husky Injection Molding Systems Hawker Beechcraft Carestream Health The Warranty Group RSI Home Products TMS International ResCare Inc.06 1.47 NAV / share 2.59 Committed Investment Structure (US$) 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.87 2.67 2. Summary NAV By Industry Net Asset Value ($mlns) Per Share 611 682 434 340 301 175 211 97 97 2.18 20.34 35. Investment Thesis Management has a long history of creating value.0 na na 115. 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 2.87 2.6x 3.8 3.82 0. There is ample capital available for management to create value with 58% of NAV in private companies and another 12% in cash & equivalents.0 197.1 3.77 3.96 0.82 1.61 1.0 8.TSX) Current Price : 12.3 na na 5.33 0.17 5.7x 5. CFA (416-956-6676) Kevin.5 na na na 3.25 Sector Outperformer Paul Holden.9% .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 .44 0.68 1. Celestica Skilled Healthcare Group Inc.2% 2010A 35.26 0.Month Price Target: All figures in millions except per share data Net Asset Value NAV P/NAV Y/Y chg in NAV 2008A 31.9x 8.61 1.35 -11.7% 2009A 32.210 5.ca Kevin Cheng.0 96.41 6.82 0.35 C$40.12 318 22.11 1.9% Capital na 1655 3450 4300 574 318 875 Market Price Value (C$) 67.48 1. (OCX .948 749 513 4. The company was founded in 1984 and has produced a 29% annual rate of return on its investments.92 6.5 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$) 114.82 24.0 na na na 38.0 8.54 1. Onex Partners III.55 11.

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

38 / 1. Rate (E) 52-week Range Shares Outstanding Float Avg. where applicable.com and ResearchCentral.5M 249. Canada M5J 2S8 (416) 594-7000 Ian Macqueen.31-C$35.Institutional Equity Research Company Update January 17. 2011 Stock Rating: Oil & Gas . www.0x 6.0M Nil NM Yes Current C$43.62 per Shr NM $168. CPE-6 & Topoyaco that will be drilled in 2011..50.cibcwm. Toronto. P.29E $5.67 266. Investors should consider this report as only a single factor in making their investment decision. Price Target PRE-TSX (1/12/11) Key Indices: TSXOilGas NM C$13.Nielsen@cibc.com . 2010 2011 2012 P/CF 2010 2011 2012 $2. We expect the company's 2011 exploration drilling at Quifa.2x 8. P.27E 14. Since inception.42E $4.903 $9. CPE-6 and La Creciente to fuel future growth. Strong Growth Continues Market Weight 12-18 mo.6M C$0. 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. including potential conflicts of interest. 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. Reuters.2 BBbls OOIP Rubiales field and will have increased gross production almost 12-fold to 170 MBbls/d by YE 2010.to 18-month price target of C$43. growing to 92 MBoe/d in 2011 and 104 MBoe/d in 2012 based only on development of Rubiales and Quifa. 1 (403) 260-8675 Ian.com All figures in US dollars. 161 Bay Street.pacificrubiales. management has focused on developing the 4.O.50 C$33.5x Stock Price Performance Source: Reuters Company Description Pacific Rubiales Energy Corp. We forecast 57 MBoe/d (after royalty) in 2010.82 3-5-Yr.ca Paul Nielsen 1 (403) 216-3403 Paul. As a result.985:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports. Our C$43. CIBC World Markets Inc.(C$0.60/FD share for the producing assets plus cash.ca Find CIBC research on Bloomberg. liabilities and dilutive proceeds and C$20.Geol.151.880. firstcall. PRE has a series of upcoming catalysts that should continue to drive the stock to new highs. Brookfield Place.International E & P Sector Outperformer Sector Weighting: Pacific Rubiales Energy Corp. EPS Gr. In our view.46/FD share unrisked) for prospects in Quifa. Box 500. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Daily Trading Vol.02/FD share in risked upside (C$38.7M Shrs 1. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.Macqueen@cibc. See "Important Disclosures" section at the end of this report for important required disclosures.1% December $43. Additional discoveries on the offsetting Quifa block should provide another 30 MBbls/d of production by YE 2010.50 price target includes a base NAV estimate of C$23.

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

669 36.0x 1.75 2012E $30. Price Target: $52.027 48.371 30.73 $9.76 $6. Gold Zinc Lead Copper Total Cash Costs Per Silver Per Silver Eq.363 0 6.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 $1.600 $0. 2009A 23 38 101 98 31 14 2010E 25 37 91 99 31 11 2011E 24 36 104 103 33 16 2012E 25 35 90 105 34 17 2013E 31 43 76 111 50 19 INCOME STATEMENT (in US$ millions.00 $0.009 77.697 7.935 632.ca Robert Hales.600 7. NET ASSET VALUE (in US$ millions. 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 $2.64 87 $316 $15 $95 $34 -$5 $456 $190 $76 $3 $114 $1.34 $0. (416) 594-7261 robert.5x P/NAV ($20/oz Silver. $12.12 107 US$/oz US$/oz $5.200 10.94 107 $395 $18 $78 $40 $0 $531 $483 $169 $5 $314 $2.340 6.37 2011E $28.00 107 $388 $18 $83 $40 $0 $529 $449 $157 $4 $292 $2.89 $4.09 $2.551 17.765 30.0x 3.606 Silver Eq.00 PAAS-NASDAQ (01/12/11): $37.132 9.468 41.76 $0.282 1.230 6.482 82.836 39.00 $6.842 1.35 $6.014 'mln oz 'mln oz '000 oz 'mln lbs 'mln lbs 'mln lbs ('mln ounces) $246 $13 $78 $10 $12 $359 $91 $28 $1 $70 $0.995 Brian Quast.65 $2.000 18.341 2. except per share amounts) 2009A Revenues Expenses Operating Expenditures S.786 2.quast@cibc.08 $0.687 Silver Wheaton Cash Debt Total PRICE ASSUMPTIONS 2009A Silver Gold Zinc Lead Copper US$/oz US$/oz US$/lb US$/lb US$/lb $14.678 12.90 $0.69 $3.617 189 155.00 $1.00 2010E 2011E 2012E 2013E Silver Eq.0x 0.678 1.20 $4.168 60.69 Fiscal Year End December 31 COMPANY DESCRIPTION Pan American Silver Corp.00 $10. Oz. The company is also well positioned to make future acquisitions.895 7. (416) 956-3725 brian.0x 2.5x 1.164 1.00 $1. except per share amounts.55 $2.969 2.cooper@cibc.hales@cibc.68 RESERVES AND RESOURCES (in thousands unless otherwise indicated) Tonnes 10.00 $2.18 $2.00 .96 $11.817 37.80 $1.83 $0.225 $0.12 $5.Navidad Permitting Is Key Catalyst In 2011 .94 $0.17 $0.500 2.146 3.045 13.457 11. Source: Company reports and CIBC World Markets Inc 72 (US$/oz) $8.976 14. (ounces) 128. 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.372 10.00 $4.87 50 40 30 20 10 0 2009A Silver Production Total Cash Cost Per Silver Oz.70 $974 $0.435 9.660 3.75 $3.70 ($0.388 770 3.388 8.10 $8.ca Barry Cooper.315 30.717 28.5x 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) 64.284 33.5x 3.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. and provides investors leverage to silver prices. (416) 956-6787 barry.585 $288 ($21) $2. and Bolivia.926 14.90 $0.35 Silvercorp Pan American Fortuna Silver Endeavour Silver Coeur d'Alene Hecla First Majestic 2010E $20.25 2. 5% Discount Rate) PRODUCTION AND COSTS Production Silver Silver Eq. Argentina.75 $3.44 $2.January 17. Peru.41 $3.19) $26.47 $24.01 $10.096 21.G&A D. 2011 Precious Metals PAN AMERICAN SILVER Stock Rating: Sector Outperformer Sector Weighting: Overweight 12-18 mo.00 $1.700 $0. Production Total Cash Cost Per Silver Eq.935 799.78 $2. is a primary silver producer with operating assets in Mexico.853 NAV/sh $1.254 1.41 $5.484 12.75 $3.55 $3.

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

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

Box 500. Rate (E) 52-week Range Shares Outstanding Float Avg.com . Price Target PMG-TSX (1/12/11) Key Indices: TSXOilGas NM C$19.67/FD share unrisked). Reuters. Our base NAV estimate for PMG. Toronto. P. P. which could be realized from 2011 exploration drilling.4x 10.to 18-month price target of C$42. After shooting extensive high-quality 3D seismic data on the surrounding lands. Investors should consider this report as only a single factor in making their investment decision.985:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports.0M Shrs 601.6x Stock Price Performance Source: Reuters Company Description Petrominerales Ltd.com All figures in US dollars. where applicable.0x 7.57 102. including producing assets plus cash.O.ca Paul Nielsen 1 (403) 216-3403 Paul.Geol. See "Important Disclosures" section at the end of this report for important required disclosures. 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.56E 7. Canada M5J 2S8 (416) 594-7000 Ian Macqueen. unless otherwise stated.ca Find CIBC research on Bloomberg. Newer areas of exploration for 2011 include the deep foothills (two 25MMBbls+ prospects) and a burgeoning heavy oil trend (50 MMBbls+ prospects).00 C$37.12 We recently initiated coverage of Petrominerales with a Sector Outperformer rating and now have a 12. bringing our PT to C$42. which could drive the stock to new highs. Sixteen of the best prospects will be drilled in 2011 (roughly 38% of the company's 2011 exploration program). 2011 Stock Rating: Oil & Gas .00. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.070 $3. Daily Trading Vol.9M 100.00.Macqueen@cibc.International E & P Sector Outperformer Sector Weighting: Petrominerales Ltd.06E $3.Nielsen@cibc. management has identified another 55 exploration prospects for future drilling. Expecting Follow-up Success In A Big Exploration Year C$42. www.39E $5.43M Nil NM Yes Current 3-5-Yr.Institutional Equity Research Company Update January 17. Both of these areas afford the company an opportunity to make a material discovery that could reshape its future. is C$23. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.50 / 1. firstcall.petrominerales. 1 (403) 260-8675 Ian.1M C$0.02 per Shr NM $517.70/FD share in risked upside (C$54. 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.cibcwm..3% December $42. PMG has a 45+ well exploration program in 2011 that is focused in some very prospective areas. liabilities and dilutive proceeds. EPS Gr. We have also included C$18. 161 Bay Street.(C$0.85-C$37. including potential conflicts of interest. CIBC World Markets Inc. As a result. Brookfield Place.877.com and ResearchCentral. Market Weight 12-18 mo.32/FD share.

490 22.% Production Per Share (boe/d per MM FD) .mm Average Trading Volume (50 Day) Annual Dividend / Yield 2010E C$37.$mm (except per share values) Colombia .97 2011E 39.EBITDA Total EBITDA Total Company Operating Cash Flow (US$mm) CFPS (Diluted) Operating Income Operating EPS (Diluted) Capital Expenditures Net Capex Net Capex/Cash Flow .Geol.5% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .51 $4.00 Target Return: 14.1x) 2011E 6.10% C$77.4x 7.301 100 601.88 2009 22.January 17.199 39. 2011 Petrominerales Ltd.7x 7.ca Net Asset Valuation .273 26.2 0% 375 1% 441 2011E $720 $720 $532 $5.4x 2012E $85.9x 2011E $85.Debt Adjusted Financial Statistics . (PMG-TSX) Current Price: C$37.877 (C$577) C$3.4x 8.0x 7. Ph: (403) 260-8675 E-mail: Ian.50 $0.199 39.84 $100 $1. P.$M Float .668 Total Risked NAVPS .2x 0.6x 12.070 C$0.ca Associate: Paul Nielsen.Macqueen@cibc.% Free Cash Flow Debt Analysis Net Debt .00 $4.3 0% 252 (33%) 295 2012E $526 $526 $374 $3.490 22.02 88% P/NAVPS (Risked) Target P/NAVPS (Risked) 100% Total Unrisked Asset Value C$8.8x) (0.97 2010E 38.10% C$42. 2009 $61.8x 10.98 P/NAVPS (Unrisked) 48% Target P/NAVPS (UnRisked) 54% CIBC Deck NYMEX WTI (US$/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 .06 $236 $2.2009 Total Risked Asset Value C$4.1x) 2012E 9.273 26.Nielsen@cibc.2x) 2010E 5.12 104 C$3.3x 7.99 $3.0x 2009 13.0x 2010E $79. Ph: (403) 216-3403 E-mail: Paul.969 38.30 $482 $511 91% $52 2010E ($570) (1.64 $550 $550 147% ($176) 2012E ($193) (0.3% Sector Outperformer Analyst: Ian Macqueen.97 2012E 26.00 $298 $298 105% ($15) 2009 $63 0.8x 13.1x 14.0 0% 373 73% 438 2010E $704 $704 $563 $5.37 $0.12 Price Target: C$42.$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.663 Total Unrisked NAVPS .0x) (0.25 $630 $630 118% ($98) 2011E ($421) (0.3x 15.56 $173 $1.Expecting Follow-up Success In A Big Exploration Year .0x 78 .50 $0.$mm Enterprise Value .5x) (0.94 $0.5 0% 215 nmf 253 2009 $297 $297 $284 $2.969 39.8x 6.50 / 1.5x 10.$M Net Debt .39 $240 $2.00 $4.

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

cibcwm.989:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports.1x 5.31E $3. Tsui.7x P/NAV.9M 186. 2011 Stock Rating: Metals & Minerals Sector Outperformer Sector Weighting: Quadra FNX Mining Ltd. Canada M5J 2S8 (416) 594-7000 Alec Kodatsky 1 (416) 594-7284 Alec.128.98-C$18..4x 4.25A $2.05E 13. Toronto.com All figures in US dollars.ca Terry K. due mainly to the addition of Morrison. Rate (E) 52-week Range Shares Outstanding Float Avg. P. www.8M Shrs 1.024 $3.quadramining. Market Weight 12-18 mo. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. 161 Bay Street.05E $4.4M Nil / Nil December $11.240. 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.com .H.27 per Shr NM $0. 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. Box 500.3x Stock Price Performance Cash Flow Per Share 2009 2010 2011 P/CF 2009 2010 2011 $1. CIBC World Markets Inc. albeit with above-average.21E 24.Kodatsky@cibc. including potential conflicts of interest.71A $1.O.Tsui@cibc. Price Target QUX-TSX (1/12/11) Key Indices: None NM C$8. and strong balance sheet.50 C$16.330. our favored commodity exposure. Brookfield Place. See "Important Disclosures" section at the end of this report for important required disclosures. where applicable.ca Find CIBC research on Bloomberg.2x Source: Reuters Company Description Quadra Mining Ltd. As a result. which has future potential to add significant value. firstcall.97 Quadra FNX is an operationally diverse large-cap copper miner with an attractive growth pipeline. EPS Gr. in our coverage universe.(C$0. Daily Trading Vol. with copper output set to more than double by 2015 as Sierra Gorda enters production. CFA 1 (416) 956-3287 Terry. Strong Copper Production Growth To Overcome Weak 2010 Operating Performance C$25. near-term operational risk. Investors should consider this report as only a single factor in making their investment decision.2x 13. low political risk profile. The company also holds the highest earnings and NAV leverage to copper.3M No Current 3-5-Yr. has quickly emerged as an Americas-focused developer and producer of copper.com and ResearchCentral. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. We expect QUX's copper production to increase ~40% Y/Y. The Victoria project should continue to advance. 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. Reuters.7x 8. unless otherwise stated.57 188.0M Nil $2. Management has delivered on promised production growth.Institutional Equity Research Company Update January 17. QUX is trading at about 0.

7 104.00 2.31 2011E 10.88 2010E 9.980 C$ 1.50 4.225) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ## 1.00 $1.0 2.34 $1.902 2.6) nm nm 0.17 1. .500 0.57 1.11 0.9 $4.19 100% 28. Cu) "Total" Cost (US$/lb.128 n/a 2010E 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 .972 (303) 161 43 603 0 3.Capital expenditures .4 5. basic 0.02) 2009A 2010E 2011E 2012E 1.43 $2.26 0.65 0.1 2.50 $1.57 $1.09 0.73 23.8 3.92% 8.990 ## 1.38 2.21 2012E 9.88 2.8 4.62 1. as well as water rights acquisitions and permitting.1 55. 31. (QUX) Current Price: $16.419 2.0 7.4 142.25 2.78 20. 2009 Robinson Carlota Franke Sierra Gorda McCreedy Podolsky Levack Levack Footwall Operating Summary Robinson Copper Production (mlbs) Cash cost (US$/lb.73) ($3.0 1.38 2012E 2.16 4.76 1.08% 2.86 $1.8 8.247 2.96 $1.5 1.2 10.131 581 345 598 903 3.03% 0.00 0.54% 111.1 $0.99 100% 2.06 (1. the company possesses advanced development project Sierra Gorda.kodatsky@cibc.41 1.05 3090 5.8 2.897 161 43 615 0 4.2 65.5 10. a robust balance sheet and the potential to add low-risk incremental growth at below-average capital costs.33 0.66 ## 10 10 29 42 ## 80 205 301 351 0 0 0 0 0 ## 51 113 486 344 ## 0. In our view.50 $0.02) ($0.801 965 840 591 591 2.62 2010E 942 378 267 202 205 1.9 $2.50 Reserves & Resources At Dec.Development milestones of the Sierra Gorda project prefeasibility study.60 2.0 30.With a strong financial position.98 2012E 2E 6.205 Q3 2010A 323 545 0 2. which we expect to emerge as the company's highest operating margin asset as it ramps up to full production 2011.61 6.tsui@cibc.77 1.9 45. Cu) Morrison Copper Production (mlbs) Cash cost (US$/lb.090 3.4 (13.54 100% 7.98 1.00 Ni 0.53 1.8 $2.17 $1.12 0.67% 6.12 0.016 911 646 646 3.09% 1.9 0.381 3.com Source: Company reports and CIBC World Markets Inc.05 4.10 1.904 ## 0 ## 0 ## ## ## 163 0 79 0 1.25 4.5 40.97 2010E 2.005 1.31 2.94 3.7 142.11 0.247 (133) 161 43 546 0 2. we expect the company to continue to focus on exploration that can yield new discoveries while maintaining its current strong production growth profile.9 60.Strong Copper Production Growth To Overcome Weak 2010 Operating Performance .97 12-18 Months Target Price: C$25.94 Cash cost (US$/lb Cu) $2.average Preferred equity . Cu) Carlota Copper Production (mlbs) Cash cost (US$/lb.00 0.222 2.7 155.00 $0.7 1. Cu) Podolsky Copper Production (mlbs) Cash cost (US$/lb. unless otherwise stated) Sector Outperformer Alec Kodatsky (416-594-7284) alec.0 55.99 2011E 4.2 1.09% 0.93 1.904 Tonnes (mm) Grade Cu (%) Ni (%) Mo (%) 652.80 $1. CIBC Forecast Ni price (US$/lb) Cu price (US$/lb) C$ exchange rate (US$) 20 2009A ## ## ## 6.25 1005 27. except for Sierra Gorda (at 10%).0 0.48 100% 13. Cu) Levack Copper Production (mlbs) Cash cost (US$/lb.4 $0.12 $0.08 $0.42 0.3 0.57 Profile Quadra FNX is a growing copper producer with a significant nickel and precious metals production profile. CIBC price forecasts and after tax.129. the market is not fully pricing in the start-up of the Morrison project.29 2. 2011 Quadra FNX Mining Ltd.quadramining.06 1.205 ## (133) (303) (789) (1.6 1. .39% 65.5 0.27 0.5 116.5 24.3 4.0 13.50 $2.15 0.00 High: 18.7 56.basic ($mm) Cash ($mm) Working capital ($mm) Total debt ($mm) Common equity ($mm) Net debt/common equity (x) Year-end Dec.50 0.62 2.93 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) .8 10% 11% 0.January 17. Outlook .04 0.3 1.54 0.59 $1.768 2011E 169% 241% 219% 330% 6% 109% 27% 3% 56% 50% 36% 36% - 20 2009A 2010E 2011E 2012E ## 80 205 646 591 ## 32 88 101 121 (16) 22 57 12 ## ## 46 13 12 12 ## 142 328 816 736 ## 1.Maintenance capex .66 4085 5.897 4.36 1.00 2012E Sensitivity to ±10% Change in Forecast Price EPS ($) 2011E NAVPS ($) 2012E -5% -8% -8% -29% 3% 133% 46% 34% 54% 47% 33% 33% $/Shr.2 1.71 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% $mm 67 210 117 1.50 (All figures in US$.30 2.2 ## 1.0 8. Chairman Paul Blythe.808 1.02 1.00 Low: 8.average Minority interest / other Other non-core Enterprise value 20 2009A ## ## ## 0.205 3.11 2.9 35.ca Terry Tsui (416-956-3287) terry.26% 2009A 2010E 2011E 2012E 100% 122.0 2.0 15% 32% 0.23 $1.83 3.11 $0. CEO Web Site 20 2009A ## ## ## ## ## ## 460 174 89 80 80 0.21 4.2 0.4 22% 37% 0.8 1.00 0.42% 0.00 $0. www.0 $2.90 3.31 2.84% 0.14 0.62 5.247 2.09% 188.6 188.2 0. 8% real discount rate on assets.0 66.The start-up of Morrison and the ramp-up at Carlota and Franke should drive the company’s near-term metals production growth.972 3. Cu) Franke Copper Production (mlbs) Cash cost (US$/lb.05 ($0.24 0. mining-friendly jurisdictions in North and South America. In addition. Cu) McCreedy Copper Production (mlbs) Cash cost (US$/lb.5 32.17) 1.23 $0.43 100% 25.05 3.71 1.1 54.71% 1.27 $1. will likely represent the medium-term catalysts.12 0.08) $0.7 0.25 25.05 2222 13.268 ## 247 425 425 425 ## 86 221 221 221 ## 781 1.00 ($4.54 ## 2012E 1.32 $0.4 5.95 0.82 ## 51 113 486 344 20 2009A 2010E 2011E 2012E ## 133 346 832 1.416 1.99 3.8 141.980 2.02% 4.225) 20 2009A 2010E 2011E 2012E ## 1.7 0.00 Cu 0. which has the potential to double its current copper production once in operation in 2014.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 . Cu) Cash operating cost Royalties Total cash cost Non-cash cost (DDA) Total production cost G&A Interest cost Total cost MANAGEMENT Terry MacGibbon.00 25.41 2011E 1.06 (789) (1.6 0.4 4.19 0. The company's assets are located in politically stable.0 5.7 ## 169.82 2011E 3.98 1.8 1.00 -$0.9 13.50 -$1.205 3.085 4. Investment Summary Quadra FNX has a strong metals production growth profile. 31 EPS ($) 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 0.8 13.9 ($3.39) 100% 0.00 0. a coppermolybdenum project in Chile.07 1.952 200 200 (221) 270 567 4. 81 .43 3.

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

we continue to believe Rogers represents good value for investors.3x 6. with current valuations well below historical levels. firstcall.19 per Shr 38.715. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. 2011 Stock Rating: Telecommunications & Cable Services Sector Outperformer Sector Weighting: Rogers Communications Inc. We rate Rogers Sector Outperformer with a $44 price target.0M 484. Toronto. Given our confidence in Rogers' execution. Market Weight 12-18 mo.10E 14.7 6. CIBC World Markets does and seeks to do business with companies covered in its research reports. CFA Michael Lee. While we expect wireless competitive worries and pricing pressure to persist.ca Michaelc.O. Box 500.B-TSX (1/12/11) Key Indices: S&P/TSX 60 16.5M Shrs 1. Daily Trading Vol. owns the largest wireless operator and cable operator in Canada.1x Source: Reuters Company Description Rogers Communications Inc. The company also has an extensive portfolio of media assets. and owns the Toronto Blue Jays of MLB. While Rogers' cable segment continues to show signs of maturity. Reuters.com and ResearchCentral. we remain bullish on the long-term fundamentals of wireless. Canada M5J 2S8 (416) 594-7000 Tony Rizzi 1 (416) 594-7299 Tony.Lee@cibc. CFA 1 (416) 594-7454 1 (416) 594-7907 Bob.0M Yes Current 3-5-Yr.04E $3. cable & telecom space.ca Find CIBC research on Bloomberg. Investors should consider this report as only a single factor in making their investment decision.. and expect to see continued growth in data in future quarters.0M Nil $4.0 $4.546 $20.ca Robert Bek.64 574.Institutional Equity Research Company Update January 17. Rogers is well positioned to take on any TV competition. See "Important Disclosures" section at the end of this report for important required disclosures. a focus on cost cutting should result in EBITDA growth.3x Stock Price Performance EBITDA ($ mlns. ensuring ARPU remains flat to slightly up by year-end.28 / 3.176.1% $30.6x 11. 161 Bay Street.524. where applicable. Brookfield Place. either by way of traditional incumbents through IPTV offerings or over-the-top Internet offerings.7x 6. including potential conflicts of interest. Valuation Too Attractive.101.Rizzi@cibc. unless otherwise stated.64-$41. at least in the short term.) 2009A 2010E 2011E EV/EBITDA 2009A 2010E 2011E $4.7% December $7. with a history of strong shareholder-friendly policies. CIBC World Markets Inc.415.00 $35. Rate (E) 52-week Range Shares Outstanding Float Avg. Price Target RCI. We continue to believe that wireless offers strong growth ahead despite competitive pressure.cibcwm. 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.Bek@cibc.0% $9. Even With Wireless Concerns $44.125. as there remains little need for capital in the medium term.ca All figures in Canadian dollars.com .850.48A $3.15 Rogers is our top pick for 2011 in the media.rogers.1M $1.2 $4. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. As a result.2x 11. P. Shareholder gains will come from solid free cash flow generation. EPS Gr. www.

6 2.6 4.2 671.426. CFA (416-594-7454) Bob.8 748. Company reports and CIBC World Markets Inc.0 9. RCI shares are trading at a material discount to our NAV.0 575.8% 2.0 3. Even With Wireless Concerns .8% 4.6% 35. engaged in wireless voice and data services. Given the heightened focus on cost efficiencies and margin expansion.0 2.855.8% 32.00 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.0 2.0 647.0 2.150.79 1.1x 6.6x 16.9x 6.300.0 104.335.8% 2. we believe the prospects of attracting higher value subs will continue to drive strong data adoption capable of moderating the effect of voice erosion.0 1.2% y/y Growth 6. Chart 1: Revenues & EBITDA By Segment (2010E) 100% 75% 50% 25% 0% Revenues Wireless Cable 11.060.0 6.2 1.3x 17.3x 7.760. CFA (416-594-7907) Michaelc.5% 3.0 2.0% EBITDA Media Key Operating Statistics (Last Reported Qtr.7 655.0 1.730.0 $76.058.850.0x 18.2 1.495.0 1.247.0 Q3/10 8.8% 13.To 18.5% 3.91 Rogers Communications Inc.685.673.4% 2009A 11.0% 38. With current concerns over competition and AWS entrant risks overblown.7x 2011E 10.0 1.021.Lee@cibc. leading to improving ARPU trends in future quarters.0 909.9x 19.56 2011E 6. (RCI.0 424.0 995. we believe Rogers will continue to deliver strong value to its shareholders.625.0 4.9x 15.625.0 228.1x 25.415.7% 2008A 11.6 624.Valuation Too Attractive.7 1.309.0% 2.0 3.1x 29.1x 2009A 8.5% 29.4x 2010E 11.8% 35.7x 9. we expect both free cash flow and dividends to grow at a healthy clip.0 1.06% 22.15 12.779.0 2. and with the implementation of a sizeable share buyback program.0 3.7 1.2 9.0 1. internet broadband and telephony products.98 2008A 4.0 $74.5x 14.2x 2010E 9.0 1.6 3.0 647.0 1.0 2.0 6.8% 2010E 12.98 1.850.0 2.7% 67.21% 28.0 1.10 2011E 4.4x 18.980.8% 14.ca 2010E 6. 84 .) 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 8.461.0 575.5 251.8 3.060.7 1.756.1% -2.0 1.ca Michael Lee.0 9.597.623.4% Source: Thomson.9% 1.747.415.2x 12.0 1.ca Tony Rizzi (416-594-7299) Tony Rizzi@cibc.090.0 1. as well as a provider of cable television services.3% 2.7 655.715.731.881.3% 17.157.0% 2011E 12.0 167.2x 6.Bek@cibc.250.4 9.0x 27.0x 6.8% 9.9x 6.04 2010E 4.786.7x 2009A 14.0 4. 2011 Current Price : C$35.0 3.160.756.035.1x 2011E 11.715.719.29 2009A 6.809.002.TSX) Sector Outperformer Robert Bek.7% 5.8x 5.48 2009A 4.2% -25.0 3.0 1.366. Investment Thesis While there remains concern over the effects of industry pricing pressure on wireless ARPU.0 502.6 1.6% 2.700.046.566.5% 55.7x 30.Month Price Target: C$44.0 1. Rogers also has a broad portfolio of media assets (radio.292.2x 16.0 125.January 17.0 0.605. providing an attractive entry point for investors looking to benefit from RCI's strong growth potential for both wireless and cable assets. TV and publishing) and owns the Toronto Blue Jays MLB franchise.B .478.6% 38. FD EPS Free Cash Flow EBITDA Less: Capex Cash Taxes Cash Interest Operating Free Cash Flow (FCF) Operating FCF Per Share 2008A 2008A 2008A 7.0 2.9% 15.6x 6.6 2.8 671.0 4.73 Company Profile Rogers is a diversified Canadian communications company.

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

As a result.80E $0.cibcwm.000 $3. including potential conflicts of interest.com . See "Important Disclosures" section at the end of this report for important required disclosures. Operational Consistency Combined With Growth Upside C$18. Daily Trading Vol. www.(C$0. With growth upside at Mana and torque to higher gold prices at Samira Hill and Kiniero. Overweight 12-18 mo. Fofina and Fobiri. P.6M 269.44 271. with Phase III completed ahead of schedule and under budget. where applicable.6x 11. firstcall. Semafo benefits from a complementary portfolio of assets.8M Nil / Nil December $1. 2011 Stock Rating: Precious Metals Sector Outperformer Sector Weighting: Semafo Inc. unless otherwise stated.23 Semafo has been a model of operational consistency. we believe management's French-Canadian background will remain an advantage for the company. It has also delivered on expansion plans at its Mana plant.. with a 10% increase in gold price generating an approximately 23% increase in CFPS. is a Canadian-based mining company with gold production and exploration activities in West Africa.Chiew@cibc. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.50 C$11.ca Barry. A feasibility study is scheduled for release Q1/11. Investors should consider this report as only a single factor in making their investment decision.semafo.Institutional Equity Research Company Update January 17.2x 12. CIBC World Markets Inc. Niger and Guinea. Semafo currently operates three gold mines in Burkina Faso. Brookfield Place. increasing throughput to 6.000 tpd (bedrock).com and ResearchCentral. Canada M5J 2S8 (416) 594-7000 Kevin Chiew 1 (416) 594-7457 Kevin.083. 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.0x 14.ca All figures in US dollars. exploration activities at Mana yielded several new discoveries such as Wona SW. In 2010. EPS Gr. 161 Bay Street. Box 500.58E $0. Reuters. CFA Barry Cooper 1 (416) 594-7106 1 (416) 956-6787 Cosmos.Cooper@cibc.11-C$14.6M No Current 3-5-Yr.11E 19. The company has one of the highest leverages to gold.300.97E $1. Management will continue to focus on creating additional value with the development of the Mana underground. Kona. Operating in French West Africa. Rate (E) 52-week Range Shares Outstanding Float Avg.3M Nil $465. Price Target SMF-TSX (1/12/11) Key Indices: None NM C$4.com Cosmos Chiu.5M Shrs 2.O.92E 27.2x Source: Reuters Company Description Semafo Inc.42E $0.ca Find CIBC research on Bloomberg. 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.Chiu@cibc.7x 10.989:US$1) CIBC World Markets does and seeks to do business with companies covered in its research reports.71 per Shr NM $19. meeting production/cost expectations the past three years.3x Stock Price Performance Cash Flow Per Share 2010 2011 2012 P/CF 2010 2011 2012 $0. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Toronto.

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% 2.65 2.18 $0.06 2.07 $0.01 3. based on $1.5x 1.UG Samira Hill Kiniero 2013E $193 $19 $0 $174 $0. Price Target: C$18.665 687 909 530 1.95 2010E 2011E $1. We believe Semafo is in a position to grow through acquisition in a West African region that remains highly fragmented.OP Mana .8x 2.64 200 150 100 50 0 $450 $400 Total Cash Costs Source: Thomson.377 1.225 $0. Niger and Guinea. 2011 Precious Metals SEMAFO INC.38 242 $132 $40 $13 $7 $192 $124 $11 $113 $0.88 2010E $1.745 8.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.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.cooper@cibc.50 SMF-TSX (1/12/11): C$11.3x 2.3x 1. With 100% of its revenue generated from gold and 100% of its production unhedged.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. Company reports and CIBC World Markets Inc.Operational Consistency Combined With Growth Upside . Currently Semafo operates three gold mines in Burkina Faso.OP Mana .20 1.58 272 $147 $48 $13 $5 $214 $235 $19 $216 $0.38 400 350 300 250 $550 .00 $0.08 $0.485 12. Stock Rating: Sector Outperformer Sector Weighting: Overweight 12-18 mo.January 17. in addition to its expansion of Mana.201 18.689 1.700 $0.ca Tonnes Grade (g/t) Au Ounces Au 18.569 33. (416) 956-6787 barry.200 gold) Mining Assets Mana .57 $0. 87 Cash Costs ($/oz) 5% 5% 5% 5% 90% 90% 80% 85% $565 $245 $156 $85 $137 $1. Reclamation S.362 $5.8x Cash Adjusted NAV Multiples PRODUCTION AND COSTS Production Mana Samira Hill Kiniero Total Cash Costs Mana Samira Hill Kiniero 2009A 2010E 2011E 2012E 2013E '000 oz '000 oz '000 oz US$/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.80 1.90 $0. is a Canadian-based mining company with gold production and exploration activities in West Africa.02 Mana .50 $4.23 Fiscal Year End December 31 COMPANY DESCRIPTION Semafo Inc.80 $0. except per share amounts.D&A.86 2.5x 2.71 $0.80 1.188 $2.770 2. except per share and indicated amounts) Production (000s ounces) Cash Operating Costs (US$/oz) Cash Costs (US$/oz) Revenues Expenses Operating Expenses D.600 $0.chiu@cibc.276 596 187 643 159 PRICE ASSUMPTIONS Gold Exchange Rate US$/oz US/CAD 2009A $974 $0. INVESTMENT THESIS Semafo has successfully commissioned three mines in West Africa. RESERVES & RESOURCES (in thousands unless otherwise indicated) Mana (Burkina Faso) Proven & Probable Measured & Indicated Inferred Samira Hill (Niger) Proven & Probable Measured & Indicated Inferred Kiniero (Guinea) Proven & Probable Measured & Indicated Inferred 18x Cosmos Chiu.0x 1.20 1.ca Kevin Chiew. (416) 594-7106 cosmos.95 2012E INCOME STATEMENT 2009A (in US$ millions.8x 1.95 2011E 2012E $1.592 9.92 $1. (416) 594-7457 kevin. Semafo has one of the highest lev erages to gold for both its cash flow and NAV.97 272 NAV $157 $52 $13 $5 $226 $288 $38 $249 $0.chiew@cibc.5x 0.42 $0.437 11.31 $0.92 1.ca Barry Cooper.

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

ca Nick.Large Cap Sector Outperformer Sector Weighting: Suncor Energy Inc.50 $37.Institutional Equity Research Company Update January 17. EPS Gr.6x 7.45 1.ca Find CIBC research on Bloomberg.60A $1.0M Shrs 5. Rate (E) 52-week Range Shares Outstanding Float Avg.8x 26. 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. Reuters.suncor. 2011 Stock Rating: Oil & Gas . 2009 2010 2011 P/E 2009 2010 2011 $0.68 3-5-Yr.0M Nil $37.318.19 per Shr 9.000 Bbls/d of oil sands capacity that it will continue to grow through 2015. Furthermore.573.91E $4. Suncor should be able to deliver this growth while generating $1 billion-$4 billion per year of free cash flow. where applicable. Suncor remains the king of the oil sands.com . Suncor has 392.Balaux@cibc.92E 15.562.37A $3. CIBC World Markets does and seeks to do business with companies covered in its research reports. CFA Nick Lupick 1 (403) 221-5700 1 (403) 221-5049 Andrew.9x 9.0M 1. 161 Bay Street.3x Stock Price Performance Cash Flow per Share 2009 2010 2011 P/CF 2009 2010 2011 $2.105. www. unless otherwise stated. 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.Lupick@cibc.40 / 1. Brookfield Place. There are no major shareholders. its strong balance sheet and the outlook for significant free cash generation – all while the company continues to increase oil sands output.6M $0.0% $8. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report.527 $59.com Andrew Potter..91-$39.1% December $47. CIBC World Markets Inc.270. the stock should be a strong performer. respectively – its closest peers. P. We believe that as Suncor continues to demonstrate improved reliability.O. Canada M5J 2S8 (416) 594-7000 Kyle Balaux 1 (403) 216-3401 Kyle.337.ca All figures in Canadian dollars.0M No Current $47.18E 62. As a result. 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. Box 500. including potential conflicts of interest.com and ResearchCentral. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. We believe investor interest in oil sands continues to increase and that Suncor will re-emerge as a "go-to" oil sands investment. Suncor Is Still King Of The Oil Sands Market Weight 12-18 mo. Toronto. NYSE NM $29.3x 17. Daily Trading Vol. With defined growth through 2020 and another 15 billion barrels to develop beyond that. Price Target SU-TSX (1/12/11) Key Indices: Toronto.Potter@cibc.cibcwm. See "Important Disclosures" section at the end of this report for important required disclosures. firstcall. Investors should consider this report as only a single factor in making their investment decision.43E $2.7x Source: Reuters Company Description Suncor is an integrated oil company approximately 85% levered to oil.

00 $0.800 50.9x 13.0x 17.2x 26.211 482.40 $5.724 $7.mmcf/d Syria Natural Gas Production .00 $0.9x 12.5x 6.22 US$6.0x 2014E 5.00 $84.9% $53.22 US$6.ca Kyle Balaux.03 $8.30 US$4.976 700 11% 64% 445 9% 379 2013E $7.27 $8. NYD) Current Price: $37.087 62% $5.97 2014E 358 100 458 5.900 623.Lupick@cibc.$M Net Debt .313 283.751 $373 $4. Ph: (403) 216-3401 E-mail: Kyle.$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.00 $0.% Production Per Share (Boe/d per MM FD) .546 $11.198 $13.07 $8.000 38.1% Sector Outperformer Analyst: Andrew Potter.41 $6.028 717.02 $75.mmcf/d Natural Gas (MMcf/d) Western Canada Oil & Liquids Production .97 2015E 350 100 450 5.800 64.99 US$9.mm Average Trading Volume (50 Day) Annual Dividend / Yield 2010E $37.67 $0.779 $4.800 62.5x 11.922 88% $1. 2011 Suncor Energy Inc.282 408.91 $2.382 $4.9% $47.19 P/NAVPS (Risked) 80% 101% Target P/NAVPS (Risked) Total Unrisked Asset Value $88.1x 2012E 6.50 US$9.340 0.650 62.270 ($261) $12.1x 10.1x 0.bbl/d Synthetic Crude Oilsands Production .3x 2014E US$95.318 1.200 40.3x 33.1x 2010E 10.754 $361 $4.256 1.044 50.000 42.638 76% $2.4x 7.02 $75.22 US$6.645 2015E $320 0.736 0.201 792 9% 69% 504 1% 429 2015E $8.99 $66.30 $7.43 $3.January 17.80 P/NAVPS (Unrisked) 70% Target P/NAVPS (UnRisked) 88% CIBC Deck NYMEX WTI (US$/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 .00 $5.$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 .1% Financial Statistics And Current Valuation Share Price ($) Weighted Average Diluted Shares O/S Market Capitalization .75 $4.0x 2015E 4.177 486.Debt Adjsuted Financial Statistics .00 $0.ca Net Asset Valuation .484 ($266) $13.972 556.8x 0.159 $1.000 39.119 45.Balaux@cibc.288 $6.5x 21.6x 0.00 $94.50 Target Return: 26.678 $11.bbl/d North Sea Oil Production .00 $0.511 Total Unrisked NAVPS .552 40.342 $1.88 2010E 429 64 493 6.bbl/d Oil & Liquids (bbl/d) Production .51 $77.054 ($256) $9.429 $4.116 $350 $4.850 566.41 $6.97 2012E 372 90 462 5.00 $94.300 35.$M Float .800 65.40 US$4.527 $0.00 $89.02 $75.18 $5.35 US$9.151 $393 $3.1x 5.97 2011E 380 90 470 5.509 58.365 643 12% 62% 409 12% 349 2012E $6.68 Price Target: $47.053 2016E ($4. Ph: (403) 221-5049 E-mail: Nick.097 $1.8x 2016E US$95.12 $69.1x 2011E US$79.442 $4.4x 11.2x 8.337.3x 0.68 1.5x 2013E US$90.07 $74.109) nm nm 2016E 4.50 US$9.523 1.000 59.786 2013E $5.989 $361 $4.800 57.627 Total Risked NAVPS .92 $3.99 US$8.679 2010E $10.267 $10.728 $7.1x 2013E 5.94 $3.692 2011E $8.075 69% $3.167 $3. CFA Ph: (403) 221-5700 E-mail: Andrew.318 $10.1x 90 .Suncor Is Still King Of The Oil Sands .7x 11.954 ($283) $16.7x 14.498 ($272) $14.86 $8.234 564 15% 56% 359 306 2010E $4.390 358.42 $58.860 2014E $3.868 76% $2.37 $3.569 68.7x 2012E US$85.573 $59.22 $6.500 295.85 US$9.000 706.boe/d East Coast Oil Production .% Free Cash Flow Debt Analysis Net Debt .61 US$3.2009 Total Risked Asset Value $77.881 59% $2.500 59.000 52.MBoe/d Natural Gas % Oil Sands % Production Per Share (Boe/d per MM FD) Production Growth Per Share .bbl/d Oil Sands Production .585 35.256 $69.7x 9.7x 2015E US$95.800 52.23 $0.860 497.Potter@cibc.2x 6. (SU-TSX.129 $6.1x 9.55 $67.40 / 1.00 $5.906 50.255 $1.562 5.875 59.073 502.5x 0.764 $1.9x 6.985 $332 $4.25 $4.000 34.423 $7.874 849 9% 72% 540 7% 460 2016E $10.$mm Enterprise Value .69 $8.bbl/d Libya Oil Production .087 65% $2.2x 10.560 $3.50 US$9.758 783 10% 68% 498 12% 424 2014E $8.426 $1.23 US$5.125 59.00 $5.720 $7.97 2013E 365 90 455 5.951 $308 $3.575 0.0x 0.207 2012E $7.ca Nick Lupick.141 $8.000 42.513 ($277) $14.97 2016E 343 100 443 4.224 $1.141 ($413) $8.257 53.1x 2011E 8.4x 9.112 $3.456 $2.071 575 14% 57% 366 2% 312 2011E $4.875 59.059 774.00 $94.874 $11. 2010E US$61.469 $1.

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

0M No Current 3-5-Yr. Valuation also supports a positive view on the shares.44 / 3. we view the deal favorably. and offers a full array of financial products and services to over 18 million customers worldwide. CIBC World Markets Inc. management noted it will be providing guidance on the dividend in the upcoming quarter. While TD left its dividend unchanged in Q4/F10. we believe revenue growth will be a key success factor for the Canadian banks. Rate (E) 52-week Range Shares Outstanding Float Avg. unless otherwise stated. it trades at a 21% discount to its peers. Investors should consider this report as only a single factor in making their investment decision. 2011 Stock Rating: Banks Sector Outperformer Sector Weighting: Toronto-Dominion Bank Revenue Growth To Drive Outperformance In F2011 $84. TD trades at a 2% premium on F11 earnings relative to peers compared with an 8% pre-crisis 10-yr average premium. $5. CFA 1 (416) 956-3723 Meny. compared with a historical average discount of 5%. Given its strategic potential and tolerable financial implications. implying an increase could be feasible in the near term.00M $38.0% $61.9x 11.S. platform by creating a vehicle to deploy its large U.29 per Shr 13.3 billion acquisition of auto lender Chrysler Financial. firstcall.cibcwm.S. We rate TD SO.0M $3.394. TD recently announced the US$6.77A $6.ca Robert Sedran.ca CIBC World Markets does and seeks to do business with companies covered in its research reports. www. Canada M5J 2S8 (416) 594-7000 Meny Grauman.5M 878. As a result.25-$77. retail franchises will help drive outperformance in F2011. Mehmed Rizvanovic.O.14E 12.000 $65.37 878.00 $74.7M $2.ca Find CIBC research on Bloomberg.908.com and ResearchCentral. Daily Trading Vol.7x 10.Sedran@cibc. Reuters.tdbank. On a P/B basis. Toronto.121. where applicable.. Price Target TD-TSX (1/12/11) Key Indices: TSXFinSv 10.506. CFA (416) 594-7283 Mike. including potential conflicts of interest.20 In what is expected to remain a challenging economic environment.Grauman@cibc. EPS Gr. Our top pick in the sector is TD Bank.3% October $44.4x Stock Price Performance Source: Reuters Company Description TD Bank is one of Canada's leading financial institutions.8% $12.5M Shrs 2.Institutional Equity Research Company Update January 17. investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Market Weight 12-18 mo. as we expect strength from its Canadian and U.36E $7. Box 500. The purchase complements TD's existing U. TD's payout ratio currently falls in the middle of its target range (based on our F2011 estimates).com .ca All figures in Canadian dollars. See "Important Disclosures" section at the end of this report for important required disclosures. deposit base. CFA 1 (416) 594-7874 Robert. P.S. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report. Brookfield Place.184. 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.Rizvanovic@cibc. 161 Bay Street.

78% F2009A 10.587 75% 20% 0.4x 10.46% F2012E $7.329 7.Sedran@cibc.5x 12.4% 3.0% 1.016 93% 11.Rizvanovic@cibc.3% F2012E 13.5% ) F2010A 0. 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 $5.200 (9%) 12.254 23.6% 2.Grauman@cibc.3%) 1. 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.8% 1.36 10.6x F2012E 10.072 272.249 129.168 F2011E 74.063 (5. (2) Total ACLs as a % of GILs.699 3.322 255.3% 189.416 6. P&C Banking F2011E 11.808 5.833 88.9x 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.S.3% F2009A 0.7x 2.3% (1.159 F2012E 79.685 (16%) 12. (3) Ex cludes gains/(losses) on inv estment securities.750 91.January 17. CFA (416-594-7874) Robert.3% F2010A 12.056 3.6x Q4-10 1.9% 13.4% 3.7% 61. except per share data (excl.0% 215.781 100.3% 14.To 18-Month Price Target: C$84.2% 3.701 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.155 3.ca Meny Grauman.9% F2011E 12.3% 229.8% 59.270 F2012E 12. 93 . 2011 Toronto-Dominion Bank (TD-TSX) Current Price: C$74.83% F2009A 2.757 280.39% 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% 0.946 265.233 299.2% 2.00 All Figures in $ millions.2% 11.770 291. 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 18.14 12.7% 199.311 558 2.612 7.585 F2009A 65. CFA (416-594-7283) Mike.5% 13.910 F2010A 71.248 (15.496 9.442 F2009A Wealth Management F2010A Wholesale Banking Q4-10 Corporate U.410 121.9% 3. one-time items) KEY MULTIPLES F2009A F2010A P/E Multiple 13.50 1.7x 11.287 1. TD remains rated Sector Outperformer.8% 12.962 8.509 87.7%) 1.77 4.Revenue Growth To Drive Outperformance In F2011 .857 94.665 102.20 12. repos).3% 9.1% F2011E 0.63% Q4-10 3.4% 58.037 8.1x F2009A $5.ca F2011E 11.3% F2009A 11. CFA (416-594-3723) Meny.932 309.8% 11.507 109.1% 9.4% 3.6% 3.ca Mike Rizvanovic.6% 4.3% F2012E 0.320 (22%) 12.7% 60.456 677 2.639 (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.086 F2011E $6.8% 4.68% F2010A 10.738 318.1% 13.

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

95 . and are not responsible for errors or omissions. CIBC World Markets Inc.January 17. 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. Technical analysis is one of many analytical tools that may be useful in making an informed investment decision. The technical analyst may not file updates in the event that the facts. representative to request copies of relevant equity research reports published by fundamental analysts for further information. We recommend that clients contact their CIBC World Markets Inc. including technical levels of trading trends. The issuers or securities discussed in these sections are not continuously followed by the technical analyst. However. price resistance and/or support. 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. We make no guarantees as to the accuracy.Top Picks Of 2011 . CIBC World Markets Inc. are not intended to serve as precise “fundamental price targets” and should not be relied upon as such. the opinions expressed herein. trends or opinions expressed in this report change. thoroughness or quality of the information presented. The comments and views expressed in the technical analysis sections are those of the technical analyst. recommendations and price targets based upon a “fundamental” analysis of their businesses. may also publish research reports on the issuers discussed herein that may communicate different or contradictory opinions. Investors should not expect continuing analysis or additional reports from the technical analyst relating to the securities discussed in this report.

Top Picks Of 2011 . 2011 96 .January 17.

2011 97 .January 17.Top Picks Of 2011 .

or at the beginning of any subsection hereof. 2011 IMPORTANT DISCLOSURES: Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research 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. Recipients of this report are advised that any or all of the foregoing arrangements. hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was. is. CIBC World Markets generally prohibits any research analyst from serving as an officer. related securities or in options. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report. related to the specific recommendations or views expressed by such research analyst in this report.January 17.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. may at times give rise to potential conflicts of interest. as well as more specific disclosures set forth below. 98 . including the CIBC World Markets Investment Banking Department. futures or other derivative instruments based thereon. directly or indirectly. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. director or advisory board member of a company that such 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.

99. C$27. Sector Outperformer) Barrick Gold Corporation (2f.14. Sector Outperformer) Angle Energy Inc.87.92. 2c. Sector Outperformer) Gammon Gold Inc.27. (2g. 7) (BNP-TSX. 6a. C$14. 9) (CP-TSX. (FM-TSX. Sector Underperformer) IAMGOLD Corporation (2g) (IAG-NYSE.85. (2a. Sector Outperformer) Allied Nevada Gold Corp. C$25.02.88.04. Sector Outperformer) Hecla Mining Company (2g) (HL-NYSE. Sector Outperformer) Kinross Gold Corporation (2g) (KGC-NYSE. (2a.80. 2g. 2e. 2g. (2g. 7) (FNV-TSX. US$9.75. Sector Performer) First Quantum Minerals Ltd. US$31. Sector Outperformer) Golden Star Resources Ltd. C$16. C$52. 4b. Sector Performer) H&R REIT (2a. Sector Performer) Crescent Point Energy Corp.B-TSX. 2f. (2g) (FR-TSX. Incorporated (2g) (VNP-TSX. Sector Underperformer) Genworth MI Canada Inc. (2g. 2c.A-TSX. (2g) (GAM-TSX. 7. 2g. (2a. C$12. US$47. (2g) (KGI-TSX. 2e. 2f.67. C$20. Sector Outperformer) Cenovus Energy Inc. 7) (GG-NYSE. (2g) (BNE-TSX. 2e. Sector Outperformer) Endeavour Silver Corp. Sector Performer) Enerplus Corporation (2g.27. C$32. 2e. 2g) (DAY-TSX. 2011 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.26. 7) (ABX-NYSE. C$17. 9) (ECA-NYSE. C$9.08. (2g) (CZE-TSX. 9) (CNR-TSX. US$24. Sector Performer) Centerra Gold Inc. 7) (MIC-TSX.42. 7) (CGA-TSX.30. (2a. (2a.86. 2c. Sector Performer) Kirkland Lake Gold Inc. Sector Outperformer) Imperial Oil Limited (2g) (IMO-TSX. 3c. 2e. Sector Outperformer) C&C Energia Ltd. Sector Performer) First Majestic Silver Corp. (2g) (ANV-AMEX. (2a. Sector Outperformer) ARC Resources Ltd.UN-TSX.45.23. (2g) (ARZ-TSX. US$69. (2g) (GSS-AMEX. (2g) (CG-TSX. 7) (CPG-TSX. (2a.14. 3c. Sector Underperformer) Jean Coutu Group (PJC) Inc. 2g.51. C$7. C$21. Sector Outperformer) Fortuna Silver Mines Inc. 2g) (BOX. C$4. 2g) (CSH. C$9. 7) (ARX-TSX. 12) (CLS-NYSE. 2c. C$7.58. US$3. 12) (BBD. 2d. C$2.69. C$12.68. Sector Outperformer) Daylight Energy Ltd. Sector Performer) Goldcorp Inc.17. C$30. Sector Performer) Aurizon Mines Ltd. 2c. 4a.84. (AGI-TSX.Top Picks Of 2011 . C$6. 2e. Sector Outperformer) Bombardier Inc. 7. 2g. (2g. Sector Outperformer) Chartwell Seniors Housing REIT (2a.: Stock Prices as of 01/17/2011: 5N Plus. 2e. 2g) (NGL-TSX. (2g. US$24.January 17. US$5.19. Sector Outperformer) CAE Inc. 4a. Sector Outperformer) Canadian National Railway Co. Sector Outperformer) Coeur d'Alene Mines Corp.05. 2e. Sector Outperformer) Agnico-Eagle Mines Limited (2f. Sector Outperformer) Gold Wheaton Gold Corp. C$48. 7.UN-TSX. 2g. US$40. (2g. Sector Performer) Alamos Gold Inc.38.90. C$42. C$32. C$5. Sector Performer) Black Diamond Group Limited (2g) (BDI-TSX.24.23.21. C$21. Sector Outperformer) Eldorado Gold Corporation (2g) (EGO-NYSE.22. 4b. Sector Outperformer) Bonavista Energy Corporation (2a. 3a. Sector Outperformer) Canadian Pacific Railway Ltd. 2e. C$66. (2a. 2c. Sector Outperformer) Celestica Inc. (2a.59. C$119.72.UN-TSX. 2c.64. US$9. 7) (ERF-TSX. 9) (CGT-NYSE.42. 3a. US$17.66. 7. Sector Outperformer) Franco-Nevada Corporation (2g. 7. Sector Outperformer) Empire Company Limited (2g. 7) (AEM-NYSE. 7. 2e.97. C$68. 13) (EMP. 2g. C$28. Sector Underperformer) CGA Mining Limited (2g. C$42. 2e. US$17. Sector Outperformer) Baytex Energy Corp. 7. (GLW-TSX. Sector Performer) Bonterra Energy Corp. Sector Outperformer) 99 . (2g) (CDE-NYSE. C$4.43.53. C$6. Sector Performer) Brookfield Office Properties Canada REIT (2a. 7.77.12. C$6. C$8. 12) (PJC. Sector Outperformer) EnCana Corporation (2g. 9) (CVE-TSX. US$16.A-TSX. 2g) (FVI-TSX. (2g) (BTE-TSX. 2c. 2g) (EDR-TSX.05. 2e.07. C$53. 2e. 2c. 7) (HR. 2c. 2g.

US$47. 2c. 7. C$10. Sector Outperformer) Silvercorp Metals Inc. US$23. (2g) (MN-TSX. Not Rated) Skilled Healthcare Group Inc. C$45. (2a. C$12.70. Sector Outperformer) NAL Energy Corporation (2a. 2e. 2g) (PAAS-NASDAQ. Sector Outperformer) New Gold Inc. C$13. Inc. Sector Outperformer) Quadra FNX Mining Ltd. US$2.B-TSX. C$21. (2g) (TET-TSX.72. 13) (SJR.00. (2g) (PMG-TSX.01.98. 2c. (2g) (SLW-NYSE. Sector Outperformer) Pan American Silver Corp. 2e. 2011 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc. (2g. C$4. 2e. 3a.30.20. 2c.07. (2g) (PBN-TSX. 9) (SU-TSX. 12) (OCX-TSX.: Stock Prices as of 01/17/2011: Comcast (CMCSA-NASDAQ. (2a. 2c. (PWT-TSX. US$140. Sector Performer) Progress Energy Resources Corp. (2a. C$76. (2g) (NGD-TSX.06. C$10. 12) (TCK. C$38. 2d. US$35.99. (SKH-NYSE. (2a. C$13. 2g) (NAE-TSX. Sector Performer) Newmont Mining Corporation (2g.23.84. 9. (2a. Sector Performer) Penn West Petroleum Ltd. 3c. C$7. 2e.39. C$13.72. Sector Outperformer) Shaw Communications Inc. C$32. 3b) (NEM-NYSE. 2e. 2g) (PMT-TSX.90. 2g) (SMF-TSX. US$66. 2b.81. 2g. 7. Sector Outperformer) Pacific Rubiales Energy Corp. 2g.70.January 17.44.20. Sector Outperformer) Shoppers Drug Mart Corporation (2g) (SC-TSX. 2e. 2e. 7) (TD-TSX. C$8. 2c. 2e. US$23. Sector Performer) Silver Standard Resources Inc. C$5. (2g. Inc. 2g) (PEY-TSX. 2e. 2c. US$55. (2a. 3c. Sector Performer) TD Bank (2a. 2c. Sector Performer) Semafo Inc.00. 7) (VET-TSX. Sector Outperformer) Taseko Mines Limited (2g) (TKO-TSX. 2c. 2g) (RGLD-NASDAQ. Not Rated) 100 . 2c.96. Not Rated) Emergency Medical Services Corporation (EMS-NYSE. C$20. 2g) (AUY-NYSE. 2c. 2c. Sector Outperformer) Pengrowth Energy Corporation (2g.B-TSX. Sector Performer) Northgate Minerals Corporation (2a. Sector Outperformer) Total Energy Services (2g) (TOT-TSX. 2e.19. (2a. Inc. 3a. 3a. 2e. 2g) (PRQ-TSX. 2g) (SVM-TSX. 2e. (2a.10. Not Rated) Spirit AeroSystems. C$13. Sector Outperformer) Perpetual Energy Inc. US$31. US$22. (2a. Sector Outperformer) Petrominerales Ltd. C$4. Sector Underperformer) PetroBakken Energy Ltd. (SPR-NYSE. 2g) (NXG-AMEX. C$37. C$32. 7) (PGF-TSX.95. US$11. US$11.15. 2c.B-TSX. 2e.89.07.52.35. C$17. 2e. C$35. 3c. 2f. (2g) (PRE-TSX.64. 3c. C$39. 2d. Sector Outperformer) Rogers Communications Inc. Sector Performer) Vermilion Energy Inc. Sector Performer) Trilogy Energy Corp. (FSLR-NASDAQ. Sector Outperformer) Teck Resources Limited (2a. Sector Performer) Yamana Gold Inc. (2a. Sector Outperformer) Medusa Mining Limited (2g) (MLL-TSX. 2g. Sector Performer) Suncor Energy Inc. C$25. 3a. Sector Outperformer) Royal Gold. (2a. Sector Outperformer) Onex Corporation (2g. Sector Underperformer) Silver Wheaton Corp.08.78. 2e. C$18. 2g) (QUX-TSX. Sector Underperformer) Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc.30. 13) (RCI. Sector Outperformer) Peyto Exploration & Development Corp.39. 2e. 3c. C$61.Top Picks Of 2011 . 2f. 2g.10. 3a.50.73. 2c. 7.: (Continued) Stock Prices as of 01/17/2011: March Networks Corp. 2g) (SSRI-NASDAQ. (2a. 3a.07. Not Rated) First Solar.

15. 101 . US$65.January 17.61.Top Picks Of 2011 .: (Continued) Stock Prices as of 01/17/2011: Time Warner Cable (TWC-NYSE. (TRP-TSX. 2011 Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc. C$37. Not Rated) TransCanada Corp. 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.

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

***Restricted due to a potential conflict of interest. hold ratings to securities rated Sector Performer. CIBC World Markets Inc.1% 9. Stock is expected to perform in line with the sector during the next 12-18 months. and the S&P/TSX Composite in Canada.January 17. has assigned buy ratings to securities rated Sector Outperformer. Toronto. including potential conflicts of interest information. Sector rating is not applicable. Attention: Research Disclosures Request. 161 Bay Street. Coverage Universe (as of 17 Jan 2011) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 140 127 28 6 Percent 46.9% 100. Sector is expected to outperform the broader market averages.3% 2.cibcwm. Brookfield Place. please visit CIBC on the web at http://apps. Important disclosures required by IIROC Rule 3400..com under 'Quick Links' or by writing to CIBC World Markets Inc. Brookfield Place. CIBC World Markets Inc.4% 93. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 135 119 26 6 Percent 96. 103 .cibcwm. Sector is expected to underperform the broader market averages. CIBC World Markets is restricted*** from rating the stock.com/sec2711 or write to CIBC World Markets Inc. Rating Description Sector Weightings** **Broader market averages refer to the S&P 500 in the U. do not correlate to buy. Ratings Distribution*: CIBC World Markets Inc. 2011 CIBC World Markets Inc. 4th Floor. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. Sector is expected to equal the performance of the broader market averages. hold and sell recommendations. Toronto.0% Inv. Price Chart For price and performance information charts required under NYSE and NASD rules.S. Ontario M5J 2S8. Ontario M5J 2S8. and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting. 161 Bay Street. relative stock rating system utilized by CIBC World Markets Inc. Attn: Research Disclosure Chart Request.Top Picks Of 2011 . Stock is expected to underperform the sector during the next 12-18 months.7% 92. 4th Floor. CIBC World Markets does not maintain an investment recommendation on the stock. 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.4% 42.0% *Although the investment recommendations within the three-tiered. for the purposes of complying with NYSE and NASD rules. our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at http://researchcentral..

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

Sign up to vote on this title
UsefulNot useful