castle mountain mining company - denver gold group research...castle mountian - feasibility study...
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Daily Letter | 1 22 August 2014______
Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX | CF. : LSE)
The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, independent
and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important information,
please see the Important Disclosures section in the appendix of this document.
Castle Mountain Mining Company Joe Mazumdar - Canaccord Genuity Corp. (Canada)
[email protected] 1.604.643.0272
Lee Edwards - Canaccord Genuity Corp. (Canada)
[email protected] 1.604.643.7785
CMM : TSX-V : C$0.77
SPECULATIVE BUY
Target: C$1.30
COMPANY STATISTICS:
52-week Range: 0.35 - 1.10
Return to target %: 69%
Avg. Daily Vol. (000s): 157.8
Market Cap (M): C$57.5
Shares Out (M): 71.9
Shares out fully diluted:
(M): 81.5
LT Debt (M): 4.3
Working Capital (M): 8.19
FYE: Dec
Website: castlemountainmining.com
EARNINGS SUMMARY:
FYE Dec 2013A 2014E 2015E
Production 000oz: - - -
Revenue (M): - - -
Op CF (M): (6.2) (7.0) (7.3)
Inv CF (M): (0.1) (0.1) (62.3)
Fin CF (M): 4.9 5.2 161.8
Cash (M): 4.8 2.9 95.0
SHARE PRICE PERFORMANCE:
Source: Interactive Data Corporation
COMPANY DESCRIPTION: CMM is focused on the development of a permitted OP,
predominantly HL gold project in California that was a
former producer (1992-2001, Viceroy Resources). They
have progressed on a de-risking path with a resource
update (Q4/13) and a PEA (Q2/14). We anticipate further
de-risking (geotech, metallurgy, hydrogeology) leading to
a feasibility study by Q1/15. All amounts in C$ unless otherwise noted.
Metals and Mining -- Exploration and Development
SITE VISIT CONFIRMS WORK
PROGRAM FOR UPCOMING
FEASIBILITY STUDY (Q1/15)
Investment recommendation
We completed a site visit to the Castle Mountain Mine in San Bernardino
County, California to confirm the Phase 2 work program going forward
that seeks to resolve some of the opportunities and de-risk some of the
drawbacks with the various scenarios from the April 2014 PEA. The
Phase 2 program including a 30-hole (10,000 m) drill program will
inform the upcoming feasibility study due in Q1/15 and include
metallurgical samples (5 PQ holes in zones targeted early in the mine
plan) that will incorporate new ore domains previously unexploited. We
maintain our Speculative Buy rating and our C$1.30 target price.
Investment highlights
Results from three holes of Phase 2 targeting areas of known
mineralization for the metallurgical test program were released
including 102.1 m grading 7.46 g/t Au (downhole depth of 94.2 m)
drilled at the JSLA pit, which is considered to be part of the initial
phase of potential mining. Cyanide solubility tests on the high grade
results indicate the potential for good recoveries with the high grade
samples.
We expect that their infill drill program will also advance the
geological interpretation while attempting to lower the strip ratio.
Geotechnical test work, we believe, will support a higher angle
(>48º) which may lower strip ratio. A hydrology study is critical to
gauge the water capacity to meet the demand of the planned
throughput. Finally, work will also include mine infrastructure
(power, access roads), environmental, permitting and mine closure
with an EPCM schedule.
Daily Letter | 2 22 August 2014
Valuation
Our one-year, risk-adjusted target of C$1.30 is derived predominantly from the Castle
Mountain open pit, heap leach project (C$1.31, NPV@7%, ~C$235 M, P/NPV 0.9x) where
the company completed a PEA (April 2014, RPA) and is working towards a feasibility study
(Q1/15). We continue to model the company as a takeover option that is fully financed to
begin production at a 6.4 Mt/y rate at the open pit, heap leach Castle Mountain gold
project. We model the option to be triggered (2017) after it comes into production
(H2/16E).
After further adjusting for positive balance sheet items (Dec 2015, C$0.04) and negative
Corporate adjustments for G&A and interest expense (C$0.04, we arrive at our target price
of C$1.30. Our financially diluted share count is 161.2 M after accounting for future
modeled financing assumptions and in the money option and warrants.
Risks
All other factors being equal: Our sensitivity analysis to exogenous risks such as gold price
and discount rate indicates at the generic NPV@5% level (200 bps lower), our target price
would be 32% higher (C$1.72) and at a higher long-term price (+10%, LT US$1586), our
target would increase by 60% to C$2.07. The combination of a lower discount rate and a
higher LT gold price would lift our target 102% to C$2.63. On the downside, a 10% drop in
our long-term gold price (LT US$1298) would drop our target by 60% to C$0.52, hence the
company is very sensitive to gold price assumptions.
On the execution and technical side, the principal risks of the April 2014 PEA (RPA) include
the high strip ratio (6.8:1, geotechnical studies and more drilling required), hydrogeology
(water availability for the throughput range envisaged 6.4 to 8.1 Mt/y which is higher than
the previous throughput rate of 3.6 M short tons per year) and metallurgical recoveries
(78%) as 50% of ore domains are less well understood with respect to potential recoveries.
Although the company has the key Mining and Reclamation permit required for operation
but other permits are still required including emissions and water. Our modeled mine plan
requires extending the permit for disturbance beyond its current boundaries but within the
approved EIS limits.
Financing risk has been mitigated somewhat with the July 2014 financing (C$5.75 M of
gross proceeds) which provides the funds to advance the test work leading to a feasibility
study (Q1/15E). Also a significant amount of financing (debt and equity) needs to be
sourced for the development of the plan of operations (beginning at 6.4 Mt/y in H2/16). We
continue to model additional equity financings (2 tranches, C$0.80-0.90, 2015) for gross
proceeds for C$70 M combined with a debt (C$65 M, 5 years, 7%, H1/15) and a lease
(C$30 M, 5 years, 6%, H2/15) facility.
Daily Letter | 3 22 August 2014
Figure 1: Castle Mountain Mining Co. – Tear sheet
Castle Mountain Mining Co. (CMM : TSX-V | Speculative buy, C$1.30)
Last $0.77 per share
August 22, 2014
Company summary
Abridged financial statements (C$, million) & production (koz)
2013A 2014E 2015F 2016F 2017F
Payable gold (koz) - - - 38.7 98.7
Revenue - - - 57.5 145.8
Operating expenses - - - (49.3) (113.1)
EBITDA (9.4) (7.5) (5.0) 2.4 28.7
Depreciation (0.0) (0.0) - (17.2) (28.5)
Interest - - (2.3) (6.7) (6.4) CG metal price and FX assumptions
Net income (9.4) (7.5) (7.3) (21.5) (6.2) Dec 31 FYE 2014F 2015F 2016F 2017F L-T
Operating CF (6.2) (7.0) (7.3) (4.2) 22.3 Gold Price (US$/oz, rounded) 1,308 1,331 1,356 1,367 1,442
Investing CF (0.1) (0.1) (62.3) (66.7) (12.4) FX (C$/US$) 0.91 0.93 0.92 0.93 0.93
Financing CF 4.9 5.2 161.8 2.3 (4.7)
Net CF (1.4) (1.9) 92.1 (68.7) 5.2 Capital structure
Cash & equiv 4.8 2.9 95.0 26.4 31.5 Shares O/S (mln) @ Jun-14 71.8
Valuation Ops & Wts O/S
Development Asset (C$M) p/s, C$ Multiple p/s, C$ Warrants
Castle Mtn. Mine NPV @ 7% (2016 start-up) 235.1 1.45 0.9x 1.30 Options 9.7
Balance Sheet December 31, 2014 (C$M) p/s, C$ p/s, C$ Dilution from options and warrants 9.7
W/C 91.7 0.57 0.57
Cash from ITM warrants & options 7.0 0.04 0.04 Price Date Shares Issued
Cash from future financing 0.0 0.00 0.00 Equity Financing 0.80 Mar-15 25.0
Long term debt (92.0) (0.57) (0.57) Equity Financing 0.90 Dec-15 55.6
Total Balance Sheet Items 6.7 0.04 0.04
Corporate Adjustments Fully Financially Diluted Shares 162.1
Corporate G&A and Interest Expense (7.2) (0.04) (0.04)
Target Value 1.30 Heap leach development gold companies
Management
Top holders
Investor % Out
Van Eck Associates Corporation 5%
Buchan (Fraser Alexander) 4%
Buchan (Robert Mackay) 4%
Resource estimate
Capital markets profile 2014 PEA Canaccord Genuity Resource Estimate
Market Capitalization ($ mln) 57.5 20 Day VWAP 0.38 Base Case Resource Grade Mineable Resource Grade
Enterprise Value (CG est, $ mln) 56.7 52-week high 1.10 (Moz, Au) (g/t) (Moz, Au) (g/t)
Average Daily Trading Volume (k) 141.7 52-week low 0.35 3.59 0.85 3.65 0.86
(RPA, 2014) cut-off grade 0.24-0.31 g/t Au
Catalysts
Castle Mountian - Phase II drilling Castle Mountain Mine
Castle Mountian - Feasibility study
Castle Mountian - Early works
Castle Mountian - Financing (equity/debt/lease)
Target sensitivity to gold price & discount rate
H2/14
Q1/15
H1/15
H1/15
CMM is focused on the development of a permitted OP, predominantly HL gold project in California that was
a former producer (1992-2001, Viceroy Resources). They have progressed on a de-risking path with a
resource update (Q4/13) and a PEA (Q2/14). We anticipate further de-risking (geotech, metallurgy,
hydrology) leading to a FS (Q1/15E). Our current assumptions and forecasts drive an IRR of 15-17% and a
payback of 8 years versus a 17 year mine life based on an annual production profile of 165-170 koz/y at an
AISCe of US$1,140 requiring an upfront capex of US$110 M.
Amt Held (000's)
30-Jun-14
30-Jun-14
2-May-14
As of:
3,428
3,201
2,758
Shares Issued
Robert Buchan, Chairman - Mr. Buchan founded Kinross Gold Corp. in 1993 and served as its President
and CEO until 2005, he is also the Chairman of Allied Nevada Gold Corp. Mr. Buchan has over 35 years
of mining industry experience and received a Masters in Mining Engineering from Queens University in
1972.
Gordon A. McCreary, President CEO & Director - Mr. McCreary brings over 30 years mining experience
to Castle Mountain Mining Co. He has had roles at both major producers and Jr developers alike over
his career including CEO of Baffinland Iron Mines Corp., VP of investor relations at Kinross Gold Corp
and President of Dundee BanCorp. Mr. McCreary received a B.Sc. in Mining Engineering and an MBA
both from Queens University.
0.75 Nov-17
Avg. Strike Price Avg. Maturity
$0
$40
$80
$120
$160
$200
Ev/
oz
Au (
M&
I)
0.00
0.40
0.80
1.20
1.60
2.00
0.00
0.25
0.50
0.75
1.00
1.25
Volu
me (m
illion)S
hare
Price
, C$
volume closing price 50 Day MA
L-T US$/oz Au1,153 1,225 1,298 1,370 1,442 1,514 1,586 1,658 1,730
-20% -15% -10% -5% 0% 5% 10% 15% 20%
0% 0.63 1.34 2.06 2.77 3.49 4.20 4.91 5.63 6.34
5% - 0.34 0.80 1.27 1.72 2.17 2.63 3.08 3.53
6% - 0.22 0.65 1.08 1.50 1.91 2.33 2.74 3.16
7% - 0.12 0.52 0.91 1.30 1.69 2.07 2.45 2.84
8% - 0.03 0.41 0.77 1.13 1.49 1.84 2.20 2.55
10% - - 0.22 0.54 0.85 1.16 1.47 1.77 2.08
Dis
count ra
te
Source: Bloomberg, Thomson, Company reports and Canaccord Genuity estimates
Daily Letter | 4 22 August 2014
SITE VISIT CONFIRMS WORK PROGRAM FOR UPCOMING
FEASIBILITY STUDY (Q1/15)
We completed a site visit to the Castle Mountain Mine in San Bernardino County,
California, Figure 2, to confirm the Phase 2 work program going forward that seeks to
resolve some of the opportunities and de-risk some of the drawbacks with the various
scenarios. The Phase 2 program will inform the upcoming feasibility study due in Q1/15
and include metallurgical samples for bottle roll and importantly column testing (5 PQ
holes in zones targeted early in the mine plan including Oro Belle and JSLA) that will
incorporate new ore domains previously unexploited. We expect that their infill drill
program (30 hole, 10,000 m) will advance the geological interpretation while attempting to
lower the strip ratio via testing areas currently untested. Geotechnical test work, we
believe, will support a higher angle (>48º) which may lower strip ratio. As the planned
throughput is higher than the historic operation, a hydrology study is critical to gauge the
water capacity to meet the demand. Finally, work will also include mine infrastructure
(power, access roads), environmental, permitting and mine closure with an EPCM
schedule.
Figure 2: Castle Mountain Mine (San Bernardino County, CA) – Geology plan with structure
illustrating a strong NNE trend and localized rhyolite flow domes (pink) at Oro Belle and Big
Chief
Source: Castle Mountain Mining
Daily Letter | 5 22 August 2014
Well-funded to complete Phase 2 program
According to the company’s recently released Q2/14 financials, they ended the June
quarter with cash and working position of US$7.9 M and US$8.1 M, both of which were in
line with our estimates.
Static case scenario (6.4 Mt/y) or a hybrid thereof will form the basis of the
feasibility study (Q1/15)
After the company delivered their PEA (April 28, 2014 note) on the Castle Mountain open
pit, heap leach project, they highlighted the number of opportunities available that
required resolution and the risks that needed mitigation. The risks and opportunities are
based on three scenarios: the least risky is the static case with a small footprint (556 ha)
where plan of operations remains within the current mine permit to be mined at a rate of
6.4 Mt/y, whereas both the base case (6.4 to 8.1 Mt/y) and unconstrained case (up to 18
Mt/y) require an amendment of the current mining permit but their footprints remain
within the EIS boundary (1582 ha), Figure 3.
Figure 3: Castle Mountain Mine (San Bernardino County, CA) – Heap leach and waste facilities in the static (LHS) and the base
case (RHS) proposed in the April 2014 PEA with existing open pits and heap leach pad shown
Source: Castle Mountain Mining Co. Ltd.
We have assumed an intermediate case that ramps up from 6.1 Mt/y (2017) to 6.9-7.1 Mt/y
(2019). Our forecasts (3.6 Moz grading 0.86 g/t Au) and estimates drive an annual
production profile of 165-170 koz/y over a 17-year mine life at a C2 cash cost of
US$930/oz requiring US$110 M in upfront capital with an additional US$175 M in
expansion capital and US$260 M in life-of-mine sustaining capital (AISCe US$1130-
1140/oz).
Resurrecting the geology – Low sulphidation epithermal gold deposit hosted in
Miocene volcanics proximal to flow domes
The low sulphidation epithermal gold mineralization at Castle Mountain, Figure 2, is
hosted within a Miocene-aged (14-17 Ma) volcanic package of rhyolites and andesites that
overlay a Precambrian basement (gneiss/schist), which has been observed beneath the Oro
Belle open pit (1300 ft). The volcanics are intruded by inter-mineral rhyolite domes and
post mineral dykes of compositions ranging from dacite to rhyolite. The final recorded
event is a lahar that is best observed filling an erosion channel in the Jumbo open pit. The
Static Case Base Case
Daily Letter | 6 22 August 2014
gold mineralization (fine grained gold and electrum) occurs within and peripheral to the
rhyolite flow domes, a cross section of which is provided by the highwall of the northern
part of the Oro Belle open pit, as quartz stockwork and disseminated within brecciated and
silicified volcanics, Figure 4.
Figure 4: Oxidized, silica-adularia altered felsic volcanics that are subsequently brecciated from CMM-031 (127 m grading 3.1
g/t Au and 109 g/t Ag)
Source: Canaccord Genuity site visit and Castle Mountain Mining
Late stage northeast trending faults have been observed that dip moderately to steeply to
the southeast offsetting and segmenting the stratigraphy while not introducing a significant
amount of displacement according to the company. The intersections of the NE trending
structures with NW trending faults/fractures appear to host the majority of the
mineralization. The previously exploited centers of mineralization from north to south are
known as Jumbo South and Leslie Ann (JSLA), Jumbo and Oro Belle (including Hart
Tunnel) deposits, Figures 2 and 4.
Paucity of core drilling makes it difficult to correlate geology between sections
There are currently approximately 7 ore domains informing the resource estimate. We
note that the company geologists have spent 3-4 months re-mapping open pits and
correlating the information with the drilling logs (361,487 m in 1,762 historic holes which
were predominantly RC) while resurrecting the database. The paucity of core drilling and
the pervasive silica-clay alteration has made it difficult to correlate lithological packages
between sections. Also, the lack of multi-element geochemistry downhole makes it more
difficult to ascertain changes in the gold mineralization to depth. Their Phase 2 drill
program (30 holes, 10,000 m) should progress the knowledge base.
Opportunities to reduce strip ratio and process historic heap leach and waste
The opportunities highlighted in the April 2014 PEA include converting the tonnage
currently classified as waste, due to lack of drilling to ore, which would reduce the forecast
strip ratio (4.3:1 for static case, 6.9:1 for base case and 3.9:1 for unconstrained vs. our
estimate of 6.8:1), Figure 6. Results from the initial holes of Phase 2 program returned
above cut-off grade (0.40-0.45 g/t Au) results in areas currently categorized as waste in the
April 2014 PEA.
Daily Letter | 7 22 August 2014
Also in support of a lower potential strip ratio the pit slope angles have been modeled to be
48º in the April 2014 PEA which are shallower than the high walls observed at the Oro
Belle open pit, Figure 5. The company has planned a 30 hole, 10,000 m program (drill
arriving on site) to test this opportunity.
Figure 5: Castle Mountain Mine (San Bernardino County, CA) – Looking SSE at high wall at Oro Belle open pit illustrating high angle
(55-60º) versus 48 º proposed in April 2014 PEA (LHS); looking east at reclaimed leach pad indicating the amount of space available
for new material (centre); looking NNE at high wall of Oro Belle open pit to east ridge in background (RHS)
Source: Canaccord Genuity site visit
Also, the historic cut-off grade (0.50 g/t Au) exceeds the current cut-off grade (0.24 g/t Au)
making some of the material (40 M short tons) used to backfill the JSLA open pit, which is
also classified as waste, potentially economic. And there is an opportunity to recover
additional gold from the existing leach pad with a focus on areas early in the mine plan
that are higher grade but did not go to the small mill facility.
Figure 6: Castle Mountain Mine (San Bernardino County, CA) – Long section from southwest to northeast through the Jumbo and
Oro Belle open pits with the current topography and the US$1300 pit shell showing areas that have been undrilled and currently
categorized as waste (some outlined in red)
Source: Castle Mountain Mining and Canaccord Genuity estimates
Daily Letter | 8 22 August 2014
Metallurgy needs resolution while higher throughput rate needs more water
The company also highlighted a number of risks which include the metallurgical
performance of all the ore domains not previously mined currently classified as heap leach
feed in the April 2014 PEA (76.9% to 83.8% vs. our estimate of 77.6%). We note that the
oxidation level is down to 395-400 m within the volcanic pile of rhyolites and andesites
that overlay a Precambrian basement.
Results from three holes (CMM-012, 013 and 014) targeting areas of known mineralization
at JSLA and Jumbo pits for the metallurgical test program were released including 102.1 m
grading 7.46 g/t Au from a downhole depth of 94.2 m drilled at the JSLA pit, which is
considered to be part of the initial phase of potential mining due to the low strip ratio and
above average grade. Cyanide solubility tests on the high grade results indicate the
potential for good recoveries with the high grade samples.
Also, historically the Castle Mountain mine operated their facilities at a lower throughput
3.6 M short tons/y than the company plans to operate at (6.4 up to 8.1 Mt/y). The company
requires more water usage than the previous operation and needs to prove that enough is
available.
Permitting the last hurdles
As mentioned previously because the operation was placed on care and maintenance, it
continues to be permitted to operate at a rate of 6.4 Mt/y within the operating permit
boundary. If the company selects the static case, the lowest risk scenario from a permitting
perspective, the only remaining permits to be obtained revolve around emissions and
water. There are no assurances that the company will be able to permit areas outside of
the current operating limits but which lie within the EIS boundary and at a higher
throughput rate as is planned for the base and unconstrained cases. Hence, these
scenarios are higher risk.
Daily Letter | 9 22 August 2014
APPENDIX: IMPORTANT DISCLOSURES
Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby
certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research. Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of Canaccord Genuity Inc. and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Compendium Report: If this report covers six or more subject companies, it is a compendium report and Canaccord Genuity and its affiliated companies hereby direct the reader to the specific disclosures related to the subject companies discussed in this report, which may be obtained at the following website (provided as a hyperlink if this report is being read electronically) http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx; or by sending a request to Canaccord Genuity Corp. Research, Attn: Disclosures, P.O. Box 10337 Pacific Centre, 2200-609 Granville Street, Vancouver, BC, Canada V7Y 1H2; or by sending a request by email to [email protected]. The reader may also obtain a copy of Canaccord Genuity’s policies and procedures regarding the dissemination of research by following the steps outlined above.
Site Visit: An analyst has visited the issuer’s material operations located in California. Partial payment was received for
the related travel costs.
Price Chart:*
Distribution of Ratings:
Global Stock Ratings (as of 3 July 2014)
Coverage Universe IB Clients Rating # % %
Buy 602 61.2% 38.2%
Speculative Buy 49 5.0% 55.1%
Hold 290 29.5% 13.1%
Sell 41 4.2% 7.3%
984* 100.0%
*Total includes stocks that are Under Review
Daily Letter | 10 22 August 2014
Canaccord Genuity
Ratings System:
BUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months. HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months. SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months. NOT RATED: Canaccord Genuity does not provide research coverage of the relevant issuer. “Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the designated investment or the relevant issuer.
Risk Qualifier: SPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material loss.
Canaccord Genuity Research Disclosures as of 22 August 2014
Company Disclosure Castle Mountain Mining Company 1A, 2, 7
1 The relevant issuer currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided the following services
to the relevant issuer:
A. investment banking services.
B. non-investment banking securities-related services.
C. non-securities related services.
2 In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Corporate Finance/Investment Banking services from the relevant issuer.
3 In the past 12 months, Canaccord Genuity or any of its affiliated companies have been lead manager, co-lead manager or co-manager of a public offering of securities of the relevant issuer or any publicly disclosed offer of securities of the relevant issuer or in any related derivatives.
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5 Canaccord Genuity or one or more of its affiliated companies is a market maker or liquidity provider in the securities of the relevant issuer or in any related derivatives.
6 In the past 12 months, Canaccord Genuity, its partners, affiliated companies, officers or directors, or any authoring analyst involved in the preparation of this research has provided services to the relevant issuer for
remuneration, other than normal course investment advisory or trade execution services.
7 Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Corporate Finance/Investment Banking services from the relevant issuer in the next six
months.
8 The authoring analyst, a member of the authoring analyst’s household, or any individual directly involved in the preparation of this research, has a long position in the shares or derivatives, or has any other financial
interest in the relevant issuer, the value of which increases as the value of the underlying equity increases.
9 The authoring analyst, a member of the authoring analyst’s household, or any individual directly involved in the preparation of this research, has a short position in the shares or derivatives, or has any other financial
interest in the relevant issuer, the value of which increases as the value of the underlying equity decreases.
10 Those persons identified as the author(s) of this research, or any individual involved in the preparation of this research, have purchased/received shares in the relevant issuer prior to a public offering of those shares, and
such person’s name and details are disclosed above.
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12 As of the month end immediately preceding the date of publication of this research, or the prior month end if publication is within 10 days following a month end, Canaccord Genuity or its affiliated companies, in the aggregate, beneficially owned 1% or more of any class of the total issued share capital or other common equity securities of the relevant issuer or held any other financial interests in the relevant issuer which are
significant in relation to the research (as disclosed above).
13 As of the month end immediately preceding the date of publication of this research, or the prior month end if publication is within 10 days following a month end, the relevant issuer owned 1% or more of any class of the
total issued share capital in Canaccord Genuity or any of its affiliated companies.
14 Other specific disclosures as described above.
“Canaccord Genuity” is the business name used by certain wholly owned subsidiaries of Canaccord Genuity
Daily Letter | 11 22 August 2014
Group Inc., including Canaccord Genuity Inc., Canaccord Genuity Limited, Canaccord Genuity Corp., and Canaccord Genuity (Australia) Limited, an affiliated company that is 50%-owned by Canaccord Genuity Group Inc.
The authoring analysts who are responsible for the preparation of this research are employed by Canaccord Genuity Corp. a Canadian broker-dealer with principal offices located in Vancouver, Calgary, Toronto, Montreal, or Canaccord Genuity Inc., a US broker-dealer with principal offices located in New York, Boston, San Francisco and Houston, or Canaccord Genuity Limited., a UK broker-dealer with principal offices located in London (UK) and Dublin (Ireland), or Canaccord Genuity (Australia) Limited, an Australian broker-dealer
with principal offices located in Sydney and Melbourne.
The authoring analysts who are responsible for the preparation of this research have received (or will receive) compensation based upon (among other factors) the Corporate Finance/Investment Banking revenues and general profits of Canaccord Genuity. However, such authoring analysts have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate
Finance/Investment Banking activities, or to recommendations contained in the research.
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Daily Letter | 12 22 August 2014
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