Mining│Australia│Equity research│April 18, 2016

IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE THE SUBJECT OF THIS REPORT AND AN EXPLANATION OF RECOMMENDATIONS CAN BE FOUND AT THE END OF THIS DOCUMENT. MORGANS FINANCIAL LIMITED (ABN 49 010 669 726) AFSL 235410 - A PARTICIPANT OF ASX GROUP

Powered by EFA

Vimy Resources

Mulga Rock – Australia’s next uranium mine?

The Mulga Rock uranium project, WA (VMY 100%) hosts uranium resources of ■75Mlbs U308. A Preliminary Feasibility Study was released November 2015 and

the recently released reserve of 22.1Mlbs U308 supports an initial 6-year mine life.

Current work is focused on improving the understanding of the geology, optimising ■mining and rehabilitation, and refining the projected process plant design and operation. The downturn in demand for mining services and increased competition for new contracts is expected to deliver cuts to projected Capex and Opex.

Resource and reserve definition drill programs are ongoing and should see strong ■newsflow over the next 12 months. A Definitive Feasibility Study and final investment decision is anticipated by the end of 2016.

We update coverage after the release of the Reserve statement, maintaining our ■Add recommendation and adjusting our sum-of-the-parts based valuation to $0.47ps (from $0.51), which equates to our price target.

Vimy reported $7.1m cash at 31 December 2015. The top 5 shareholders account ■for over 85% of VMY shares, led by the Forrest Family and Acorn Capital.

A robust PFS and a 17-year mine life The PFS released November 2015 outlined a low-cost financially robust project based

on the total resource of 65.6Mt @ 520ppm U308 expected to support a 17-year mine life.

VMY expects initial reserve of 15.2Mt @ 660ppm U308 (reported March 2016) to support

an initial 6-year mine life. The capital cost is projected at close to US$290m, and C1 Opex is projected at US$34/lb before by-product credits.

Positive newsflow through 2016 Although VMY had received environmental approvals, the longer mine life projected from the PFS obligated VMY to re-submit the Public Environmental Review in December 2015, with comments to be lodged by 7 March 2016. We don’t anticipate any issues not previously addressed. We do anticipate strong newsflow through 2016 as VMY aims to complete the DFS with a final investment decision on the project by the end of the year. VMY expects to reduce the cost of overburden removal, budgeted at US$33.6m in the PFS, with labour rates weakened, and mining services companies highly competitive. Metallurgical studies are also underway to fully quantify the potential for an uplift in the resource grade, as well as optimising metallurgical performance, and improving the potential for achieving by-product credits.

Market supply dynamics are weak but expected to tighten Weak pricing has stalled new uranium developments. Peninsula Energy (ASX: PEN, not rated), has completed (March 2016) a supply agreement at a weighted average price of US$56/lb over a 10-year period. The industry consensus forecast is for global demand to increase to ~240Mlbs U308 by 2024, with current output of ~150Mlbs. The incentive price to bring on new supply is commonly estimated to be around US$65/lb. We have used US$60/lb in our modelling.

SOURCE: MORGANS, COMPANY REPORTS

ADD (no change) Current price: A$0.31

Target price: A$0.47

Previous target: A$0.51

Up/downside: 54.2%

Reuters: VMY.AX

Bloomberg: VMY AU

Market cap: US$53.61m

A$69.68m

Average daily turnover: US$0.00m

A$0.00m

Current shares o/s 227.7m

Free float: 35.0%

Price performance 1M 3M 12M

Absolute (%) 17.3 -10.3 -12.9

Relative (%) 17.5 -13.7 0.6

Chris BROWN

T (61) 7 3334 4885

E chris.brown@morgans.com.au

Financial Summary Jun-14A Jun-15A Jun-16F Jun-17F Jun-18F

Revenue (A$m) - - - - -

Operating EBITDA (A$m) -5.46 -11.26 -11.28 -6.00 -6.00

Net Profit (A$m) -8.30 -10.73 -11.40 -6.12 -6.12

Normalised EPS (A$) (0.020) (0.047) (0.050) (0.024) (0.022)

Normalised EPS Growth 140% 6% (51%) (9%)

FD Normalised P/E (x) NA NA NA NA NA

DPS (A$) - - - - -

Dividend Yield 0% 0% 0% 0% 0%

EV/EBITDA (x) NA NA NA NA NA

P/FCFE (x) NA NA NA NA NA

Net Gearing 2% (112%) (152%) (113%) (19%)

P/BV (x) NA 12.09 52.02 14.61 20.48

ROE 114% (322%) (187%) (131%)

% Change In Normalised EPS Estimates 0.9% 46.8% 46.8%

Normalised EPS/consensus EPS (x) 0.83 0.35 0.89

76

96

116

136

156

0.230

0.280

0.330

0.380

0.430

Price Close Relative to S&P/ASX 200 (RHS)

Source: Bloomberg

50

100

150

Apr-15 Jul-15 Oct-15 Jan-16

Vo

l th

Mining│Australia│Equity research│April 18, 2016

2

Company overview

The Mulga Rock Project (MRP) is a large uranium resource located 240km east-northeast of Kalgoorlie, in Western Australia. The MRP is Australia’s third largest undeveloped uranium project and consists of four deposits: Ambassador and Princess, which form the Mulga Rock East Deposit, and Emperor and Shogun, which form the Mulga Rock West Deposit. The Reserves defined to date are in Mulga Rock East, with 91% of the reserves in the Ambassador deposit, which holds 50% of the Resource base. The MRP shares road access with the Tropicana Gold Mine in Western Australia.

The MRP is 100% owned and operated by VMY. As the project is located in the Great Victoria Desert, there are no competing land uses to the proposed mining operation.

Investment thesis – share price catalysts

Progressing rapidly to Final Investment Decision: The Mulga Rock PFS outlined a financially robust project. VMY intends to complete a DFS by Q4CY16, with an investment decision by the end of the 2016.

Uranium long-term contract pricing is significantly higher than the current spot market implies: Recently announced deals on long-term uranium contracts show significantly higher prices than spot pricing. Peninsula Energy recently negotiated a supply agreement with a weighted average price of US$56lb. Shorter-term contracts for 2016-2020 were also negotiated with weighted average prices of US$73-75/lb.

Additional cost savings on multiple fronts: A large proportion of initial costs is the pre-stripping of pits to expose the uranium mineralisation. VMY expects to reduce the projected cost of overburden removal. Mining services companies are readily available and highly competitive. We anticipate further cost reductions in this area. Metallurgical studies are also underway to fully quantify the potential for an uplift in the resource grade.

Market supply dynamics are tightening: Current pricing has frozen new developments. Existing uranium mines are mature with few new projects coming on stream. BREE forecasts global demand at ~240Mlbs U308 by 2024 versus current output of circa 150Mlbs. The incentive price to bring on new supply is estimated around US$65/lb U308.

Valuation breakdown

We identify approximately 36% upside to our valuation of 47cps based on the

aggregate valuations of VMY’s constituent assets. We discount the NPV

valuation of VMY’s Mulga Rock PFS by 80%, which we view as being

appropriate – “hard-but-fair” - at the current stage of evaluation. As further

milestones are reached, we would look to unwind this discount to the asset

valuation. Equity upside is expected with successful completion of the Public

Environmental Review process, news associated with the Definitive Feasibility

Study and the Final Investment Decision by end 2016. Market sentiment to the

uranium market and to resource developers could also add to our valuation.

Our valuation of the VMY assets comprises a heavily discounted value on the Mulga Rock asset. As project milestones are reached we would look to unwind our valuation discount.

Figure 1: VMY valuation breakdown

SOURCE: MORGANS

Project A$m A$ps

Mulga Rock 86.2 0.38 Mulga Rock PFS discountedrisked by 80% to its NPV

Exploration Upside 26.7 0.12 Additional 20Mlbs at US$1/lb U308

Total operations 112.9 0.49

Net Debt/Cash 4.6 0.02

Corporate Overheads -10.0 -0.04

Total valuation 107.5 0.47

Mining│Australia│Equity research│April 18, 2016

3

Upside risks to our target price include: 1) Success in further reducing initial capital costs.

2) Further tightening of market supply, which would translate to increased

spot and long-term uranium prices.

3) Discovery of additional resources.

4) Further currency weakness translating to improved AUD commodity prices.

Downside risks:

1) Prolonged uncertainty and funding issues in the junior exploration space.

2) Delays in the Japanese reactor re-start program and unforeseen delays in the Chinese reactor construction program.

Company overview

The MRP is a large uranium resource located 240km east-northeast of Kalgoorlie in Western Australia within 757km

2 of tenements. The discoveries to

date demonstrate the significant exploration potential for the low-cost discovery of additional uranium resources.

The Mulga Rock project is the third largest undeveloped uranium project in Australia.

Figure 2: Mulga Rock project location

SOURCE: COMPANY

The MRP is Australia’s third largest undeveloped uranium project and comprises four deposits: Ambassador and Princess, which form Mulga Rock East, and Emperor and Shogun which form Mulga Rock West. The deposits also contain base metals – copper, zinc, nickel, cobalt - rare earths and gold, which may be produced as by-products. Our simple analysis ignores both the costs and revenues of by-products.

The Mulga Rock project shares access infrastructure with the Tropicana Gold Mine. The extensive landholding has significant exploration potential, not only for uranium but also for other commodities such as copper, nickel, cobalt and other rare earth elements.

Mining│Australia│Equity research│April 18, 2016

4

The Mulga Rock project history

1978 – mid-2000: The project was mapped by the Geological Survey of Western Australia in 1972. Japanese company Power Nuclear Corporation (PNC) commenced on-ground exploration in 1978 and actively explored and held the ground until the mid-2000s.

1980s: The Mulga Rock discoveries made in the 1980s and resulted in PNC releasing a resource of 10.8Mt @ 0.12% eU308. Other historic resources were subsequently reported, but prior to the implementation of the JORC Code.

2008: VMY acquired the project and listed on the ASX as Energy and Minerals Australia.

2009: Updated resource estimate of 25,520t of U308 at a cut-off grade of 200ppm U308 to JORC Code standards at that time.

2010: Scoping study released outlining 12ktpa U308 production with projected operating costs of US$23/lb.

2013: Experienced executive Mr Mike Young is appointed as Chairman and Mr Julian Tap is appointed as CEO.

2014: Mulga Rock resources (to JORC Code 2012 standards) upgraded to 63.5Mlbs U308. Mike Young appointed Managing Director, Hon Cheryl Edwardes appointed as Chairman.

2015: Mineral resource estimate upgrade released increasing JORC resources to 65.6Mt @ 520ppm U308 for 75Mlbs U308. Scoping study refreshed, and Pre-Feasibility study released (November 2015).

2016: Initial Probable Reserve (to JORC Code 2012 standards) of 22.1Mlbs U308 reported March 2016.

The Mulga Rock project

The Mulga Rock project comprises two deposit groups located ~10km apart. Mulga Rock West (MRW) comprises the Emperor and Shogun deposits and Mulga Rock East (MRE), Ambassador and Princess. Resources are divided roughly evenly between the two prospect areas.

The geology of the Mulga Rock project offers near surface “lignite” hosted ores, which are soft and easily mined sedimentary rocks, which should be amenable to cheap mining techniques.

Figure 3: Mulga Rock East/West

SOURCE: COMPANY

Mining│Australia│Equity research│April 18, 2016

5

Project geology

There are a number of different types of mineralisation at Mulga Rock. VMY has concentrated its studies on the near surface ores hosted in lignite (often referred to as brown coal – a soft sedimentary rock formed from naturally compressed peat). Ore zones are 2-5m in thickness and have underlying Nickel-Cobalt-Zinc-Copper mineralisation in lenses from 0.5m – 1.5m. Base metals are more prevalent at Mulga Rock East.

Generally the ore zones are enriched just below the oxidation-reduction boundary, sub-horizontal and about 40m below surface. The uranium mineralisation and most of the base metals are fine grained, disseminated through and adsorbed on the organic matter.

Mulga Rock ore is hosted within deeply weathered sediments. Ore is made up mostly of uraninite (U02) associated with metallurgically simple and soft carbonaceous material and lignite. The deep weathering also makes the orebody soft and friable.

Figure 4: Mulga Rocks geology

SOURCE: COMPANY

Mulga Rock Project Uranium Resource (updated September 2015)

A maiden resource was announced in 2009, which was generated from historical resource estimates, and which incorporated results from 766 of 2,012 holes drilled prior to VMY acquiring the project. The most recent update to the resource increased the mineral inventory to 65.6Mt @ 520ppm (75Mlbs) U308

(released 17 September 2015).

The updated resource estimate released in September 2015 increased contained uranium to 75Mlbs U308 (from 63Mlbs in 2014).

Figure 5: Mulga Rock uranium resource

SOURCE: COMPANY

Mining│Australia│Equity research│April 18, 2016

6

Mulga Rock Project base metals resource (updated September 2015)

Mulga Rock East (the Princess and Ambassador deposits) also contains a base metal resource. The mineralisation is associated with uranium and for the purposes of resource estimation the base metals within the existing uranium resource model have been included.

The Mulga Rocks base metals resource includes only the metals within the boundaries of the uranium resource and will be recovered as part of the processing of the uranium ores adding a by-product credit.

Figure 6: Mulga Rock East base metals resource

SOURCE: COMPANY – Nov 2015

Pre-feasibility study (November 2015)

VMY announced the Mulga Rock Preliminary feasibility in November 2015. The study outcomes highlighted the following:

C1 operating costs of US$31/lb U308 including base metal by-product credits over a mine life of 17 years with estimated production of 50.4Mlbs of U308.

NPV10 of A$431m including a 25% internal rate of return and a 3.9 year payback period at US$65/lb.

Breakeven price of US$50/lb U308.

Shallow open cut mining methods to a maximum of 74m.

Simple processing technology with low-cost acid leaching and resin in pulp.

Strip mining methods will be employed with pits back filled as the mining front progresses limiting the requirement for waste movement and minimising the environmental impact and rehabilitation.

Mining│Australia│Equity research│April 18, 2016

7

The Mulga Rock pre-feasibility study outlined simple mining operation with a 17-year mine life at low cost with a rapid payback period of 3.9 years.

Figure 7: Mulga Rocks pre-feasibility study financial metrics

SOURCE: COMPANY

Understanding the uranium market – Uranium 101

Uranium trades in restricted markets and is thus a more opaque and immature market than the precious and base metals markets. The fundamentals for uranium demand remain positive and are supported by a number of key drivers, which we highlight below:

The spot price of uranium isn’t the true price of all uranium sold:

The spot price of uranium is now very weak, below US$30.0/lb. Around 3% of uranium is sourced from the spot market. Energy utilities buy on a long-term negotiated contract price, commonly with a delivery time-frame of +24 months. Because of this, the price for long-term supply is substantially higher than the spot price (See Figure 8).

Examples of recent contracts above spot pricing:

ASX listed company Peninsula Energy announced its sales and marketing strategy for its Lance project in Wyoming, USA on November 10, 2015. The announcement made reference to PEN contracting 1Mlbs of uranium sales from 2016-2020 for US$73-75/lb U308 (roughly double the 2015 spot price).

Mining│Australia│Equity research│April 18, 2016

8

The uranium price weakened in 2014 as a result of the Japanese reactor shutdowns post-Fukushima. However, with the restart of the Japanese nuclear program, we note the uranium price is once again regaining upside momentum.

Figure 8: Uranium price 2011-2015 spot pricing vs long-term pricing

SOURCE: UXC

The incentive price

Market participants talk about the incentive price of uranium. This is the pricing required to encourage new supply. A number of factors are contributing to higher longer term incentive price expectations in the sector such as:

Current pricing has frozen new developments: Production shortfalls are obscured by existing stockpiles. The visible price – the spot price – remains weak limiting the appetite of equity investors and debt-funders.

It will take years to get a uranium project going: Uranium projects require long lead times to move into production. With feasibility, design, federal and state environmental approvals, federal approval of sales contracts and funding, it commonly takes a decade to get a mining project up and running.

World consumption is growing: World consumption of uranium in 2014 was 155Mlbs vs 147Mlbs of mine production, with the balance made up from the Russian Highly Enriched Uranium agreement, which was completed in 2013.

The prospects of higher uranium prices are real, in our view, on the lack of new supply, dwindling stockpiles and growing demand for energy security.

Figure 9: Incentive price to support new supply

SOURCE: COMPANY – Nov 2015

USD 25

USD 35

USD 45

USD 55

USD 65

USD 75

2011 2012 2013 2014 2015

Spot Price US$/lb Long term price US$/lb

Mining│Australia│Equity research│April 18, 2016

9

The next 10 years

Expectations of demand versus supply imply a growing supply gap is forming. The increase in reactor builds and the dwindling of secondary supplies, combined with the economic challenges faced by the existing producers is limiting the amount of new production coming on-line.

The forward looking estimates for reactor growth imply a large portion of new demand will come from China and India over the next 10 years.

Figure 10: New reactor outlook

SOURCE: CAMECO

By 2024 15-20% of supply needs to come from new sources – Cameco, the world’s largest uranium producer, forecasts annual global uranium consumption at 260Mlbs (240Mlb reactor demand + 20Mlbs strategic stockpile demand) from the projected 526 reactors (versus 433 currently). It estimates that around 20% of global supply (>400,000lb/pa U308) will be required from new sources.

Figure 11: World uranium demand to 2019 (kt U308) Figure 12: Forecast uranium consumption 2015-2024

SOURCE: BREE SOURCE: CAMECO

Mining│Australia│Equity research│April 18, 2016

10

Projected pricing – The outlook for pricing in the medium to long term remains positive. Recent data released by the Bureau of Resources and Energy Economics implies that prices are likely to rise between 2015 and 2019 in response to tighter market supply. This is largely dependent on the pace of the re-start of the Japanese nuclear power program and the construction rate of China’s reactor program.

The Bureau of Resource and Energy Economics forecasts prices to rise between now and 2019 in response to a tighter market supply. The pace of Chinese reactor construction and Japan’s nuclear power restart remain the key factors affecting the projection of prices going forward.

Figure 13: Forecast uranium prices – 2015-2019

SOURCE: BREE

Mining│Australia│Equity research│April 18, 2016

11

VMY financial data

SOURCE: MORGANS RESEARCH, COMPANY

Year to 30 Jun (A $ m) A IF R S A IF R S A IF R S A IF R S A IF R S P rice target (A $ ) 0.47

Inco me statement 2014A 2015A 2016F 2017F 2018F Valuation (A$) 0.47$

Divisional sales 0.0 0.0 0.0 0.0 0.0

Total revenues 0.0 0.0 0.0 0.0 0.0 Valuat io n summary A $ m A $ ps D C F valuat io n inputs

EBITDA -5.5 -11.3 -11.3 -6.0 -6.0 M ulga Rock 86.2 0.38 Rf 5.25%

Depreciation & amortisation 0.0 0.0 0.0 0.0 0.0 Exploration Upside 26.7 0.12 Rm-Rf 6.00%

EBIT -5.5 -11.3 -11.3 -6.0 -6.0 T o tal o perat io ns 112.9 0.49 Beta 1.20

Net interest expense -2.8 0.0 -0.1 -0.1 -0.1 Net Debt/Cash 4.6 0.02 CAPM (Rf+Beta(Rm-Rf))11.0%

Pre-tax profit -8.3 -10.7 -11.4 -6.1 -6.1 Corporate Overheads -10.0 -0.04 Tax rate (t) 30.0%

Tax expense 0.0 0.0 0.0 0.0 0.0 T o tal valuat io n 107.5 0.47 WA C C 11.26%

Abnormals - pre-tax 0.0 0.0 0.0 0.0 0.0 Shares 227.7

NPAT -8.3 -10.7 -11.4 -6.1 -6.1

Abnormals - post-tax 0.0 0.0 0.0 0.0 0.0

M inorities 0.0 0.0 0.0 0.0 0.0

Reported NPAT -8.3 -10.7 -11.4 -6.1 -6.1

C ash f lo w statement 2014A 2015A 2016F 2017F 2018F P ro duct io n (M lbs) 2015A 2016F 2017F 2018F

EBITDA -5.5 -11.3 -11.3 -6.0 -6.0 Uranium Production 0 0 0 2

Cash flow from operations -4.8 -10.8 -11.4 -6.1 -6.1

Capex 0.0 0.0 0.0 0.0 -4.0 Key assumptio ns 2015A 2016F 2017F 2018F

Disposals 0.0 0.0 0.0 0.0 0.0 USD / AUD exchange rate 0.84 0.72 0.72 0.74

Acquisitions 0.0 -0.2 0.0 0.0 0.0

Cash flow from investing 0.0 -0.2 0.0 0.0 -4.0

Incr/(decr) in equity 0.0 17.0 7.0 10.0 5.0 P er share data 2015A 2016F 2017F 2018F

Incr/(decr) in debt 3.6 0.0 0.0 0.0 0.0 No. shares 227.7 227.7 250.0 275.0

Ordinary dividend paid 0.0 0.0 0.0 0.0 0.0 EPS (cps) -0.05 -0.05 -0.02 -0.02

Other financing cash flow 0.0 -0.2 0.0 0.0 0.0 EPS (normalised) (c) -0.05 -0.05 -0.02 -0.02

Cash flow from financing 3.6 16.8 7.0 10.0 5.0 Dividend per share (c) 0.0 0.0 0.0 0.0

Inc/(decr) cash -1.2 5.9 -4.4 3.9 -5.1 Dividend payout ratio (%) 0% 0% 0% 0%

Equity FCF -5 -11 -11 -6 -10 Dividend yield (%) 0% 0% 0% 0%

B alance sheet 2014A 2015A 2016F 2017F 2018F Operat ing perfo rmance 2015A 2016F 2017F 2018F

Cash & deposits 0.5 6.4 2.0 5.9 0.8 EBIT growth 106% 0% -47% 0%

Fixed assets 0.2 0.2 0.2 0.2 4.2 NPAT growth 29% 6% -46% 0%

Other assets 0.0 0.0 0.0 0.0 0.0 Normalised EPS growth 140% 6% -51% -9%

Total assets 0.9 7.0 2.6 6.4 5.3 Asset turnover (%) 0% 0% 0% 0%

Short-term borrowings 0.0 0.0 0.0 0.0 0.0 EBITDA margin (%) NA NA NA NA

Long-term borrowings 0.0 0.0 0.0 0.0 0.0 EBIT margin (%) NA NA NA NA

Interest bearing debt 0.0 0.0 0.0 0.0 0.0 Net profit margin (%) NA NA NA NA

Total liabilities 25.6 1.2 1.2 1.2 1.2 Return on net assets (%) -309% -237% -133% -102%

Share capital 27.6 67.7 74.7 84.7 89.7 Net debt / (cash) (A$m) -6 -2 -6 -1

Other reserves 0.0 0.0 0.0 0.0 0.0 Net debt/equity (%) -112% -152% -113% -19%

Retained earnings -57.3 -64.3 -75.7 -81.8 -88.0 Net interest/EBIT cover (x) 587 -92 -49 -49

Total equity -24.6 5.7 1.3 5.2 4.1 ROIC (%) 45% 1878% 999% 999%

Total shareholders' equity -24.6 5.7 1.3 5.2 4.1

Total liabilities & SE 0.9 7.0 2.6 6.4 5.3

Valuat io n sensit iv ity to disco unt rate (A $ / share) T o tal revenues and EB IT (A $ m)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

WACC 0.00% 5.00% 10.00% 12.50% 15.00%

-12

-10

-8

-6

-4

-2

0

2

2014A 2015A 2016F 2017F 2018F

Total revenues EBIT

Mining│Australia│Equity research│April 18, 2016

12

Queensland New South Wales Victoria Western Australia

Brisbane +61 7 3334 4888 Sydney +61 2 9043 7900 Melbourne +61 3 9947 4111 West Perth +61 8 6160 8700

Stockbroking, Corporate Advice, Wealth Management Stockbroking, Corporate Advice, Wealth Management Stockbroking, Corporate Advice, Wealth Management Stockbroking, Corporate Advice, Wealth Management

Brisbane: Edward St +61 7 3121 5677 Armidale +61 2 6770 3300 Brighton +61 3 9519 3555 Perth +61 8 6462 1999

Brisbane: Tynan Partners

+61 7 3152 0600 Ballina +61 2 6686 4144 Camberwell +61 3 9813 2945

South Australia

Bundaberg +61 7 4153 1050 Balmain +61 2 8755 3333 Domain +61 3 9066 3200 Adelaide +61 8 8464 5000

Cairns +61 7 4222 0555 Bowral +61 2 4851 5515 Farrer House +61 3 8644 5488 Norwood +61 8 8461 2800

Caloundra +61 7 5491 5422 Chatswood +61 2 8116 1700 Geelong +61 3 5222 5128

Gladstone +61 7 4972 8000 Coffs Harbour +61 2 6651 5700 Richmond +61 3 9916 4000

Gold Coast +61 7 5581 5777 Gosford +61 2 4325 0884 South Yarra +61 3 8762 1400

Ipswich/Springfield +61 7 3202 3995 Hurstville +61 2 9570 5755 Southbank +61 3 9037 9444

Kedron +61 7 3350 9000 Merimbula +61 2 6495 2869 Traralgon +61 3 5176 6055

Mackay +61 7 4957 3033 Neutral Bay +61 2 8969 7500 Warrnambool +61 3 5559 1500

Milton +61 7 3114 8600 Newcastle +61 2 4926 4044

Mt Gravatt +61 7 3245 5466 Newport +61 2 9998 4200 Australian Capital Territory

Noosa +61 7 5449 9511 Orange +61 2 6361 9166 Canberra +61 2 6232 4999

Redcliffe +61 7 3897 3999 Port Macquarie +61 2 6583 1735

Rockhampton +61 7 4922 5855 Scone +61 2 6544 3144 Northern Territory

Spring Hill +61 7 3833 9333 Sydney: Level 7 Currency House

+61 2 8216 5111 Darwin +61 8 8981 9555

Sunshine Coast +61 7 5479 2757 Sydney: Level 9 +61 2 8215 5000 Tasmania

Toowoomba +61 7 4639 1277 Sydney: Hunter St +61 2 9125 1788 Hobart +61 3 6236 9000

Townsville +61 7 4725 5787 Sydney: Reynolds Equities

+61 2 9373 4452

Yeppoon +61 7 4939 3021 Wollongong +61 2 4227 3022

Disclaimer The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual’s relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so. Those acting upon such information without advice do so entirely at their own risk.

This report was prepared as private communication to clients of Morgans and is not intended for public circulation, publication or for use by any third party. The contents of this report may not be reproduced in whole or in part without the prior written consent of Morgans. While this report is based on information from sources which Morgans believes are reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect Morgans judgement at this date and are subject to change. Morgans is under no obligation to provide revised assessments in the event of changed circumstances. This report does not constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment whatsoever

Disclosure of interest Morgans may from time to time hold an interest in any security referred to in this report and may, as principal or agent, sell such interests. Morgans may previously have acted as manager or co-manager of a public offering of any such securities. Morgans affiliates may provide or have provided banking services or corporate finance to the companies referred to in the report. The knowledge of affiliates concerning such services may not be reflected in this report. Morgans advises that it may earn brokerage, commissions, fees or other benefits and advantages, direct or indirect, in connection with the making of a recommendation or a dealing by a client in these securities. Some or all of Morgans Authorised Representatives may be remunerated wholly or partly by way of commission.

Regulatory disclosures Analyst owns shares in the following mentioned company(ies): - This report was prepared solely by Morgans Financial Limited. ASX did not prepare any part of the report and has not contributed in any way to its content. The role of ASX in relation to the preparation of the research reports is limited to funding their preparation, by Morgans Financial Limited, in accordance with the ASX Equity Research Scheme. ASX does not provide financial product advice. The views expressed in this research report may not necessarily reflect the views of ASX. To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by ASX as to the adequacy, accuracy, completeness or reasonableness of the research reports.

Recommendation structure For a full explanation of the recommendation structure, refer to our website at http://www.morgans.com.au/research_disclaimer

Research team For analyst qualifications and experience, refer to our website at http://www.morgans.com.au/research-and-markets/our-research-team

Stocks under coverage For a full list of stocks under coverage, refer to our website at http://www.morgans.com.au/research-and-markets/company-analysis/ASX100-Companies-under-coverage and http://www.morgans.com.au/research-and-markets/company-analysis/EX-100-Companies-under-coverage

Stock selection process For an overview on the stock selection process, refer to our website at http://www.morgans.com.au/research-and-markets/company-analysis

www.morgans.com.au

If you no longer wish to receive Morgans publications please contact your local Morgans branch or write to GPO Box 202 Brisbane QLD 4001 and include your account details.

11.04.16