Top Picks Of 2011

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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.

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. 1 (416) 594-7000

Top Picks Of 2011 - January 17, 2011

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TABLE OF CONTENTS Director’s Overview................................................................................3 Portfolio Strategy: Do You Believe In Magic? .............................................6 TOP PICK PROFILES

5N Plus, Incorporated .......................................................................... 30

Angle Energy Inc. ................................................................................ 33

Black Diamond Group Limited................................................................ 36

Bombardier Inc. .................................................................................. 39

C&C Energia Ltd. ................................................................................. 42

Canadian Pacific Railway Limited............................................................ 44

Chartwell Seniors Housing REIT ............................................................. 47

Daylight Energy Ltd. ............................................................................ 50

EnCana Corporation ............................................................................. 53

Jean Coutu Group (PJC) Inc. ................................................................. 56

Kirkland Lake Gold Inc. ........................................................................ 59

NAL Energy Corporation ....................................................................... 62

Onex Corporation ................................................................................ 65

Pacific Rubiales Energy Corp. ................................................................ 68

Pan American Silver Corp. .................................................................... 71

Penn West Petroleum Ltd...................................................................... 74

Petrominerales Ltd............................................................................... 77

Quadra FNX Mining Ltd......................................................................... 80

Rogers Communications Inc. ................................................................. 83

Semafo Inc......................................................................................... 86

Suncor Energy Inc. .............................................................................. 89

Toronto-Dominion Bank........................................................................ 92


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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) Average Full-year Price Return TSX Annual Return 2006 (Publishing Date – January 5, 2006) 10.30% 14.51% 2007 (Publishing Date – January 11, 2007) (0.90%) 7.16% 2008 (Publishing Date – January 11, 2008) (36.80%) (35.03%) 2009 (Publishing Date – January 16, 2009) 81.60% 30.69% 2010 (Publishing Date – January 8, 2010) 20.50% 12.52% Average Annual Price Return For Last Five Years 14.9% 6.0% Source: Bloomberg and CIBC World Markets Inc.

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

For the year just ended, our analysts’ top picks, as a portfolio (if held for the full year), performed well ahead of the TSX – up 20.5% on a price basis (see Exhibit 2) vs. 12.5% for the Composite during the same period (1/11/10 to 12/31/10). Within our returns, nine of the 16 stocks outperformed the TSX Composite Index for the period and seven performed worse, although all but one achieved positive returns for shareholders.


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The highest Sector Outperformer return achieved by our analyst team, held for the full year, was Jeff Fetterly’s pick of Total Energy Services (TOT–TSX, SP rated), which generated a 106% price return for the full holding period. This is a three-peat for Jeff in delivering the top-returning stock (full-year return), although this year he didn’t recommend investors hold it for the full period, as he downgraded the stock after a 33% gain through April 2010.

Despite a more active M&A environment, none of the top picks benefitted from a big takeover premium that has been available in past years and something Jeff benefitted from with his pick in 2008. We highlight in Table 2 those four stocks for which we lowered our rating from Sector Outperformer during the course of the year and those two stocks for which we had a change in analyst coverage. In both cases, 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. If we use these returns (and pretend the investor simply put the cash raised from the sale under their pillow), our total return for the portfolio of top picks drops to 14.0%, still 150 basis points (bps) better than the Composite Index price return.

Exhibit 2. Top Pick Performance For 2010

Top Picks For 2010 Price On

1/11/2010

Drop Coverage Or Changed

Rating Price On Date

Of Change

Return To Change Of Rating Or Dropped

Coverage Date Price On 12/31/10

Full-year Price Return Reason For Change

5N Plus, Incorporated $6.25 $7.00 12.0% BPO Properties Ltd. $18.48 $21.65 17.2% Canadian National Railway Company $58.38 4/9/2010 $61.17 4.78% $66.35 13.7% Rating Downgrade Eldorado Gold Corporation (US$) $15.05 7/21/2010 $15.69 4.25% $18.57 23.4% Rating Downgrade Empire Company Limited $47.70 $55.82 17.0% First Quantum Minerals Ltd. $94.75 $108.00 14.0% Franco-Nevada Corporation $30.55 $33.26 8.9% Genworth MI Canada Inc. $25.82 $27.59 6.9% H&R REIT $16.17 $19.43 20.2% March Networks Corp. $3.93 $4.10 4.3% Pan American Silver Corp. (US$) $25.71 $41.21 60.3% Shaw Communications Inc. $21.05 $21.35 1.4% Suncor Energy Inc. $38.58 1/26/2010 $35.03 (9.20%) $38.28 (0.8%) Analyst Departure Taseko Mines Limited $4.47 11/3/2010 $4.94 10.51% $5.20 16.3% Rating Downgrade Total Energy Services $6.89 4/15/2010 $9.16 32.95% $14.19 106.0% Rating Downgrade TransCanada Corp. $35.15 12/1/2010 $36.88 4.92% $37.99 8.1% Analyst Departure Average Price Return For Holding Through 12/31/10 20.5% TSX Composite Return 11947 13443 12.5% Source: Bloomberg and CIBC World Markets Inc.

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, but the recent efficiency push on the back of capital spending should position the U.S. economy for better job recovery in the back half of the year. While the economics team believes the Fed may act early in the year, it will not be aggressive and will likely revert to “stand-by” mode until the end of the year. In his most recent economics piece, Not Yet Heaven in Twenty Eleven, Avery Shenfeld outlines what he thinks is in store for the coming year. Much of it is expected to be the same as 2010, but with the U.S. generating slightly better GDP growth than previously forecast, at just about 2.6% – led by a slightly more confident consumer. This positioning should help to create an investment environment that continues to have more stability.


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The backdrop in Canada remains better than we foresee globally, 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. 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. When we compare the outlooks for the economies of Canada and the U.S., the economic indicators like GDP growth, consumption growth, and unemployment rate suggest, in composite, that Canada should fare better than our neighbors south of the border.

We asked Peter Gibson, Head of Portfolio Strategy, to provide us with a macro view on where he expects the markets to go in 2011. 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. 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.

Exhibit 3. Top Picks Of 2011

Ticker Company Rating 12- To 18- month Price

Target VNP 5N Plus, Incorporated Sector Outperformer $8.50 NGL Angle Energy Inc. Sector Outperformer $9.25 BDI Black Diamond Group Limited Sector Outperformer $24.00 BBD.B Bombardier Inc. Sector Outperformer $7.00 CZE C&C Energia Ltd. Sector Outperformer $15.75 CP Canadian Pacific Railway Limited Sector Outperformer $78.00 CSH.UN Chartwell Seniors Housing REIT Sector Outperformer $9.75 DAY Daylight Energy Ltd. Sector Outperformer $13.50 ECA EnCana Corporation Sector Outperformer US$36.00 PJC.A Jean Coutu Group (PJC) Inc. Sector Outperformer $11.50 KGI Kirkland Lake Gold Inc. Sector Outperformer $22.00 NAE NAL Energy Corporation Sector Outperformer $16.00 OCX Onex Corporation Sector Outperformer $40.25 PRE Pacific Rubiales Energy Corp. Sector Outperformer $43.50 PAAS Pan American Silver Corp. Sector Outperformer US$52.00 PWT Penn West Petroleum Ltd. Sector Outperformer $32.00 PMG Petrominerales Ltd. Sector Outperformer $42.00 QUX Quadra FNX Mining Ltd. Sector Outperformer $25.50 RCI.B Rogers Communications Inc. Sector Outperformer $44.00 SMF Semafo Inc. Sector Outperformer $18.50 SU Suncor Energy Inc. Sector Outperformer $47.50 TD Toronto-Dominion Bank Sector Outperformer $84.00 Source: CIBC World Markets Inc.

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, our technical analyst. On behalf of CIBC, we wish all of our clients a healthy and prosperous new year.

Quentin Broad Managing Director, Head of Equity Research


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Do You Believe In Magic? Peter Gibson, Toronto (416) 594-7194 Jeff Evans, CFA, Toronto (416) 956-3250

We believe that by the end of 2011 the TSX will have recorded gains of approximately 11.5% with a dividend yield of over 2% for a total return of approximately 14% for the year. 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%, combined with a dividend yield of approximately 1.8%. The TSX should continue to outperform the S&P 500 as a result of continued growth in the emerging nations as the U.S. Federal Reserve continues to rely on quantitative easing.

Relatively high structural unemployment in the U.S. and continued weakness in the U.S. real estate market have resulted in a U.S. recovery that is approximately one-third to one-half the rate of growth we would like to see. Unfortunately, the outlook for the global economy and, in particular, North American equity markets, relies on the U.S. Federal Reserve's successful administration of quantitative easing through 2011. At the same time, China and Japan have a vested interest in working with the U.S. to help underpin their recovery while trying to stabilize the debt crisis in Europe. So far it appears to be working. Exhibit 4 is a summary of our forecasts for 2011.

Exhibit 4. 2011 Forecasts Summary

Recent 2011E Canada TSX 13,272 14,800 T-Bills 0.95 1.28 Bond Yields 3.34 3.44 U.S. S&P 500 1,271 1,384 T-Bills 0.16 0.3 Bond Yields 3.33 3.46 WTI Oil (US$/Bbl) 88 93-103 Gold (US$/oz.) 1,369 1,580 C$/US$ 1.00 0.97-1.03 Source: Bloomberg and CIBC World Markets Inc.

Themes By traditional measures, the U.S. economy is weak but should gain some momentum in 2011. Most strategists would say the same for 2011. Presumably, therefore, the longer that the U.S. is on the path to recovery then the longer that BRIC nations will grow, albeit at much faster rates. Every year of economic growth is another year of growing global oil consumption. Coordinated global growth is clearly a leading cause of persistently higher average oil prices.

Understanding the link between quantitative easing and preventing bond yields from reaching our estimated 3.8% ceiling is the key to appreciating how long gold and oil prices and the TSX can likely rise. The benefits which Canada enjoys as an exporter of commodities while benefiting from sustainably low U.S. rates is obvious – The question is simply one of how long can the U.S. quantitatively ease and can the U.S. begin to see self-sustaining economic growth in 2011 that resembles the early stages of recovery witnessed in 2004?


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To do this, the U.S. housing market must stabilize. If the U.S. recovery is taking hold, then the U.S. dollar should strengthen. Nonetheless, we would expect continued but slower appreciation in gold prices owing to emerging economy growth, hence the US$1,580/oz. gold price target. Yet, we still believe that, if possible, the U.S. government would still choose to push the U.S. dollar devaluation below the recent lows. As long as quantitative easing holds the bond yield below 3.8%, then more can be done which still pushes the U.S. dollar devaluation further, in which case US$1,700/oz. gold is likely. 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. These risks include a number of geopolitical hotspots, the ongoing risks in Europe, the fact that the U.S. 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 recently recorded record-low volatility is very unusual. Historically, markets have recorded very low volatility immediately before crisis, often in part, due to the fact that low volatility often implies a sense of complacency.

Biggest Risk Is Deflation Although deflation is, ultimately, the biggest risk that the North American economy faces, the short-term cyclical risk is the growing fear of inflation, specifically, that of food and energy inflation at a time when North America is not recording any wage inflation. Emerging economy growth is underpinning commodity inflation while the West is not demonstrating any evidence of wage inflation.

The Fed Is Trying To Hold The 10-year U.S. Treasury Yield Below 3.8% In the absence of wage inflation, it is impossible to pass price increases through to consumers and, therefore, it is unlikely that we will witness secular profit growth driven by inflation in the way it was witnessed in the 1970s. Weak corporate profit growth makes North American stock markets very sensitive to the level of interest rates. We, therefore, believe that the U.S. Fed strategy of quantitative easing is intended to hold U.S. bond yields below the critical 3.8% level and, preferably, below the 3.5% level for as long as possible so that the U.S. economy can continue to recover at the current, relatively, weak rate. This fact underpins investors’ reliance on the Fed’s ability to continue administering quantitative easing.

We cannot over-emphasize the significance we attach to the Fed’s goal of holding 10-year U.S. Treasury bond yields below the 3.8% level, which is indicated by our asset mix models. We believe that the safe haven, reserve currency, status of the U.S. gives it the room to continue relying on the use of quantitative easing. If bond yields, however, should rise above the 3.5% level, the implication would be that quantitative easing is losing its effectiveness. The Fed then could still, reluctantly, raise short-term interest rates slightly in the hope that bond yields would then fall. 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, but it is an inherently risky strategy. In 2004, during the early stages of that five-year recovery, the Fed tilted the yield curve. Historically, when the U.S. yield curve tilts, it is very favorable for equity markets as long as corporate profitability is stable or rising.


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The Circular Irony Of Quantitative Easing, Higher Oil Prices And Stable Bond Yields In a sense, the goal would be to hold bond yields at 3.3% when, perhaps, the 10-year Treasury would naturally be at 4.1%. The longer that the Fed can do this, the greater the likelihood that U.S. economic growth gains momentum and that growth becomes self-sustaining. The risk is that inflation gains momentum and when the Fed no longer has the resources to fight the upward tendency in yields, they skyrocket. Eventually, it is like trying to stop the water flowing from a garden hose by holding your thumb over the end. A sudden significant upward move in bond yields and, therefore, 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.

In fact, our view is a little different, i.e., given the sheer potential size of emerging economies, it is a race against time to see which nation is more energy efficient, can adapt faster, develop energy substitutes faster and withstand sustainably higher oil prices longer than others. From time to time, however, high oil prices should underscore the safe haven status of the U.S. and act as a growth tax rather than a cause of secular inflation at first.

We would think that sustainably high oil prices actually contribute to weaker U.S. growth relative to their historical experience and contribute to holding bond yield in the desired rate (i.e., 3%–3.3%). The irony being that this level of bond yields increases the likelihood of more quantitative easing.

Implications At present, the 3.8% 10-year U.S. Treasury bond yield level represents the level of yields that causes the S&P 500 to appear significantly overvalued. At these levels and above, we would also anticipate significant new pressure for U.S. real estate prices. This is the dilemma the Fed faces and it is the direct result of too much government and consumer debt. On the one hand, the U.S. desperately needs a faster rate of economic recovery and, yet, if bond yields rise too much then the risk of a panic in debt markets also exists. Exhibit 5 illustrates that the implied ceiling for bond yields has been falling steadily for many years. Should the Fed be forced to tighten because the bond yields reaches the 3.8% ceiling too quickly while the U.S. economy is still relatively weak, then the risk of another U.S. recession still exists, although even moderate tightening by the U.S. would probably be perceived as a greater risk for Europe, resulting in capital flow back into the U.S. Treasury market.


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Exhibit 5. 10-year U.S. Treasury Floors And Ceilings

0

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S&P

500 I

ndex

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Bond

Yiel

d (%)

S&P 500 10-yr U.S. bond yield

1995 ceiling

1997 ceiling2000 ceiling

2003 ceiling (5.9%)

5.2% ceiling4.8% ceiling

3.5% Excess debt floor

4% 1997 floor

2.0% Ultimate floor

0%

Term Structure

3.0% Desired long term average

2002 ceiling

3.8%4.1

+57% -50% +94% -57% +85%

Source: Bloomberg and CIBC World Markets Inc.

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 3.8% ceiling and U.S. corporate profitability is rising, then we remain optimistic about the outlook for North American equities. The 10-year U.S. Treasury bond yield, however, has recently been as high as 3.5% and it is likely that quantitative easing has played a significant role in preventing yields from rising further. Since the year 2000, there have been two massive collapses in the U.S. stock market. The first collapse occurred from 2000 until October 2002. The second collapse occurred during the housing crisis of 2007 and the banking crisis of 2008. Both major market collapses were signaled by three critical observations. First, the 10-year U.S. Treasury yield exceeded the then current bond yield ceiling. Second, S&P 500 profitability had started to decline. Third, this decline probably resulted from the fact that the Fed had tightened until the U.S. yield curve became inverted (see Exhibit 7). On both of these occasions, the bid-to-cover ratio for U.S. Treasuries was also at relatively low levels (see Exhibit 8).

By contrast, the recovery in 2009 coincided with bond yields at the low end of our estimated range and forward ROE was recovering. The Fed had restored a steep positive slope to the yield curve, 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.S. Treasury market demonstrated during the global banking crisis.

To assess the ongoing potential for the U.S. equity market, the first critical step demands that we check Exhibits 5 to 8. We believe that, based on the fact that the bid-to-cover ratio, albeit manipulated by the Fed, is at very high levels and the U.S. yield curve maintains a steep positive slope, this would imply, for now, the Fed can continue to quantitatively ease and hold the 10-year U.S. Treasury bond yield below the critical 3.8% ceiling. 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.


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Exhibit 6. S&P 500 Index And ROE (Forward And Trailing)

0200400600800

10001200140016001800

Jan-9

4

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95

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96

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Jan-9

8

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99

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00

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S&P 500 ROE Trailing ROE Forward


Exhibit 7. Yield Curve

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1

%

Yield Curve


Exhibit 8. Bid-to-Cover Ratio

0

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Source: CIBC World Markets Inc.


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Self-sustaining U.S. Economic Recovery Still Depends On Quantitative Easing In fact, 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, in reality, they all turn on QE 2, 3 and the bond yield ceiling. Given these facts, we are optimistic about the Fed’s chances of success in eventually establishing a self-sustaining U.S. economic recovery, but we know full well that this view depends entirely on quantitative easing, thereby holding 10-year U.S. Treasury bond yields below the critical 3.8% level. Quantitative easing, in fact, impacts our outlook for the U.S. dollar and, in turn, emerging economy growth, oil prices, gold prices and the Canadian dollar. Virtually every forecast, therefore, at the present time, is directly impacted by the Fed’s ability to quantitatively ease and hold bond yields below the critical level. If the Fed fails, then we would expect forecasting chaos.

Exhibit 9. The U.S. Economy (Equities, Cash And Real Estate)


Could This Be 2004 Because We Are Recovering From Recession? Exhibit 9 further underscores the fine line that the Federal Reserve is walking. At the same time that bond yields are a mere 50 bps from the ceiling, U.S. residential and commercial real estate prices remain weak. Fortunately, quantitative easing is underpinned by a significant rally in the S&P 500. It is very common to experience crises late in an economic cycle such as 1987/1988 and 1997/1998 and then again recently in 2007/2008. The 2007/2008 crisis, however, resulted in a very significant U.S. recession. The U.S. equity market began to recover in October 2002 from the recession witnessed during that period. The equity market recovery was supported by corporate profit growth and the equity market rally persisted until 2007 when bond yields again reached the then current ceiling. Usually after the late-cycle crises, the market rebounds for about two years before higher rates lead to another recession, but, as in 2004, we are trying to emerge from a recession, whereas other late-cycle crises do not, typically, result in technical recessions.

U.S. Cash

S&P 500 U.S. Residential

U.S. Commercial


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Exhibit 10. S&P 500 Total Return (2000 To Present)


Resembles 2004? A Minor Positive Supporting A Growing Investor Confidence In Exhibit 10, the S&P 500 total return graph demonstrates how persistent and significant that equity rally proved to be from 2002 to 2007. Although corporate profit growth was stronger then compared with today, there were other ancillary indications pointing to a continued recovery in equity prices. It was interesting to note that there was an inverted head and shoulders pattern that occurs in 2002 and again in 2004. We witness this pattern again during 2008, 2009 and during 2010.

Head-and-shoulder patterns are among a few of the patterns that seem to have a demonstrable history of success. The simplistic implication here would be that the S&P 500 goes sideways for several months, 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.

What Pattern Is The Fed Hoping For? We would think that the Fed is hopeful that the current period resembles 2004. One of the key takeaways from that period is that bond yields came very close to our calculated ceilings and, yet, some very modest Fed tightening prevented the bond yield from rising above critical levels. Corporate profitability continued to grow during that time and, ultimately, became the basis for a sustainable stock market advance. After a sharp run-up in 2003, the S&P 500 moved sideways to slightly down for the first part of 2004 and bond yields fell modestly. We probably face a similar outcome today. If the Fed can use quantitative easing or, if necessary, very modest tightening to keep bond yields within a critical range, then the U.S. stock market may pause for part of 2011 while keeping a longer-term upward trend intact.


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In Canada, Stocks Still Outperform Bonds And T-bills The very significant U.S. stock market rally at the end of 2010 and the ongoing problems in Europe would suggest that the U.S. stock market needs to pause. In fact, Exhibits 11 and 12 illustrate the returns from Canadian and U.S. stocks, bonds and T-bills and shows very significant short-term losses in bonds since the summer of 2010 while stock prices soared. These exhibits also show that, despite all the turmoil of the last few years, 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.

Not The Case In The U.S. By comparison, 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. bonds. Canada’s superior performance resulted from a number of important factors, including a stronger banking system and sustainably higher oil and gold prices because of emerging economic growth.

Exhibit 11. Five-year Historical Returns: TSX, 10-yr Canadian Gov't. Bonds And T-bills


Exhibit 12. Five-year Historical Returns: S&P 500/600, 10-yr Bonds And T-bills


CDN Bonds

CDN Cash

TSX

CDN Bonds

U.S. Cash

S&P 600 S&P 500


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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, yet, has completely overtaken the S&P 500 and the TSX. Since the lows of 2009, the TSX has also demonstrated both a small-cap effect and a significant, related, rally in the shares of commodity sectors.

Exhibit 13. Five-year Historical Returns: TSX And S&P 500


Preference For TSX Over S&P 500 But Only If Bond Yield Stays Below The 3.8% Ceiling In The U.S. Our preference for the TSX relative to the S&P 500 depends entirely on the Fed’s ability to keep bond yields below the 3.8% ceiling. If bond yields are held in the range of 3% to 3.3% then the Fed is able to continue quantitatively easing. To the extent that this contributes to a further devaluation of the U.S. dollar then this implies generally higher gold and oil prices. Since approximately 50% of the TSX is comprised of the energy and materials sectors, the level of U.S. bond yields and the ability of the U.S. to continue quantitative easing is a major driver of potential returns for the TSX. Not surprisingly, therefore, Exhibit 14 illustrates the inverse relationship between the U.S. dollar and gold and oil prices, and Exhibit 15 illustrates the very high correlation between TSX total returns and the commodity Index.

S&P 500

TSX

CIBC Small Cap


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Exhibit 14. Cumulative Returns: US$ Trade Weighted, Oil And Gold

0123456789

10

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

707580859095100105110115120

Oil (rebased) Gold (rebased) Trade-weighted USD (RHS)


Exhibit 15. High Correlation Between TSX And CRB Returns


Other Important Circular Implications Of Quantitative Easing Quantitative easing, therefore, has a number of other important implications. Quantitative easing, for example, is intended to hold bond yields below the critical ceiling levels of 3.8% but it also contributes to the devaluation of the U.S. dollar as a result of monetizing debt and debasing the U.S. dollar in the process. The U.S. is likely to pursue this strategy for as long as it possibly can.

The goal is not so much for the U.S. to become an export-dependent country as a result of devaluing the dollar, but, rather, it is a strategy that contributes to lower interest rates for export-dependent countries and, in general, for the world. This is likely to remain the case until countries like China face a serious threat from inflation.

TSX

CRB


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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. This would imply that aggressive, easy, U.S. monetary policy results in aggressive, easy, monetary policy for China, as long as it tries to maintain its currency peg to the U.S. dollar. This has important long-term potentially crisis implications for China. Therefore, quantitative easing tends to contribute to rapid growth in emerging economies and, perhaps, even inflationary growth in time.

U.S. Dollar Devaluation In the short term, the U.S. dollar devaluation also contributes to higher oil prices. Although the U.S. is the largest consumer of oil globally, it is also relatively more efficient in its use of oil in generating GDP growth. In a sense, therefore, higher oil prices create relatively more pressure for less energy efficient, emerging economies but it also represents a growth tax on the U.S. economy, which contributes to holding bond yields down at the same time.

Higher Oil Prices Curiously, a sustainably higher oil price places relatively more pressure on other economies and may, ironically, allow the U.S. to extend its quantitative easing strategy. Sustainably high oil prices also create economic incentive for the U.S. to pursue energy substitutes and, perhaps, ultimately, force its conversion to natural gas just as the British economy once converted from coal to oil dependence.

The sheer potential size of the Chinese and Indian economies, therefore, has enormous implications for the average level of oil prices longer term and, obviously, for investing opportunities in Canada. The U.S., therefore, 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. and global recovery.

Sustainably high oil prices, therefore, are a cause and effect of quantitative easing. Sustainably high oil prices are crucial today if the U.S. is to have the economic incentive to lessen its reliance on oil before the emerging economies become so large that oil prices are crippling. Yet, high oil prices are a growth tax, which is relatively more punitive for other nations than the U.S. and in the U.S. case can help hold bond yields down. It comes full circle then. Higher oil prices can increase the risk of chaos elsewhere, thereby making the U.S. more of a safe haven and simultaneously increasing the likelihood that the U.S. can get away with more quantitative easing. In effect, 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, as well as how significant, the opportunity is for continued investment in these sectors. In turn, these sectors are supercritical to the outlook for the TSX.


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Exhibit 16. TSX Sector Returns: Financials, Materials And Energy


Devalue The U.S. Dollar, Higher Gold Prices The energy, material and financial sectors alone represent almost 80% of the TSX market capitalization. Exhibit 16 illustrates the relative performance of these three sectors since the beginning of 2000. Although the timing of the gains from the energy and materials sectors differs a little, these two sectors have been the leading drivers that have allowed the TSX to dramatically outperform the S&P 500. The TSX energy sector has moved sharply higher as West Texas Intermediate oil prices have reached the mid-90s. 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.

Up to this point, however, the materials sector has recorded gains as a result of higher gold prices from 2001 to the present. Since 2001, we have argued that the U.S. dollar devaluation strategy is ongoing and a main driver of higher gold prices. In general, we believe that the Fed will attempt to devalue the U.S. dollar for as long as possible and that this is the main driver for higher gold prices as gold is often a currency proxy. We expect oil prices to trade in a range of US$93/Bbl–US$103/Bbl throughout 2011.

TSX Energy

TSX Materials

TSX Financials


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TSX Earnings Forecasts; Key Is Stable S&P 500 ROE The North American equity market gains and concurrent U.S. bond market losses since the summer of 2010 are both unusually large. Even more dramatic, however, are the gains that were recorded by the small-cap TSX materials sector. This equally weighted small-cap index has soared in just two years.

Median Values: Key Data Points For The TSX Exhibit 17 summarizes some of the key data points relating to the S&P/TSX Index. 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. As indicated by the sector relative weights in the first column, it should be noted that the energy, materials and financial sectors account for 78.45% of TSX market capitalization.

In order, however, to minimize the impact of outliers, the table summarizes the median values for each of the sectors. For example, median TSX profit growth is a mere 0.11 standard deviations. The strongest profit growth is being recorded by the materials sector at 0.22 standard deviations. The median value for financial sector profit growth is 0.19 standard deviations, although the big five banks in Canada are, generally, recording ROE declines on a trailing basis. Therefore, 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. In effect, we anticipate stable to weaker ROE and earnings for 30% of the TSX, improving earnings for the energy sector (26%) and much stronger earnings for the materials sector. This underpins our outlook for $830 aggregate TSX earnings.

Trailing Now Leading Forward Earnings In general, we prefer to see return on equity growth rates of 0.3 standard deviations or better. The energy sector return on equity is also largely unchanged on the trailing basis. Given the recent significant run-up in oil prices, it would be expected that forward return on equity would rise. In fact, Street forward ROE growth rates are still showing minimal growth. We would expect that to change as oil prices remain close to US$100/Bbl US for West Texas Intermediate.

At this point in the cycle and given pervasive concerns about the U.S. economy, it comes as little surprise that trailing earnings are now rising very slowly in the S&P 500, while forward earnings forecasts are falling. 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%). TSX ROE, however, is likely to record better growth but from lower levels (recently 12%, median 8%).


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Exhibit 17. Key Data Points For The TSX

Median

Sector Relative Weight (%) ROE (%)

Trailing Roe

Growth (stddev)

Trailing P/E (x)

Forward P/E (x)

Dividend Yield (%)

CIBC Analyst Implied Return

(%)

Cash As % Of

Equity

Forward Roe

Growth (stddev)

Forward Roe (%)

Street Implied

Total Return

(%) All Sectors 100.00 8.85 0.11 17.58 14.89 1.56 15.72 13.12 0.08 11.93 11.02 Energy 26.10 7.67 -0.03 21.03 18.61 2.49 16.56 3.80 0.03 9.22 7.80 Materials 23.15 5.76 0.22 20.22 13.07 0.00 41.39 21.64 0.32 13.84 18.03 Industrial 5.44 10.99 0.07 18.42 17.55 1.79 13.92 16.23 -0.08 12.44 10.34 Consumer Discretionary 4.38 11.55 0.17 15.47 12.99 1.42 11.41 13.21 -0.09 11.95 10.89 Consumer Staples 2.94 15.46 0.05 14.08 14.40 1.54 9.59 8.30 -0.53 13.71 11.29 Healthcare 0.94 9.29 -0.93 25.74 22.03 0.57 10.80 -0.70 12.59 12.86 Financials 29.20 12.11 0.19 13.98 13.09 4.21 12.11 9.38 0.21 13.04 11.76 Info Tech 2.54 16.83 0.56 15.79 11.47 0.00 25.69 24.55 0.36 18.06 12.31 Telecom 3.57 13.82 -0.34 12.80 13.08 5.18 16.97 5.76 -0.05 13.61 6.52 Utilities 1.76 7.22 -0.15 19.53 21.00 5.72 10.36 3.84 -0.16 10.89 5.42 Source: CIBC World Markets Inc.

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, materials and financial sectors. Both trailing and forward growth is being recorded by the information technology sector, although this sector is 2.5% of the TSX market capitalization. In fact, the median forward P/E ratios for the materials sector and the financial sector would be close to 13x one-year forward earnings. If the Street forward earnings forecast is correct, this would imply a current P/E on forward earnings of less than 15x for the TSX overall. 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. Nonetheless, as long as the 10-year U.S. Treasury bond yield remains below the ceiling, our TSX target of 14,800 for year-end 2011 appears likely. It is also worth noting that the CIBC analyst median return is expected to be 15.72% and the Street median return is expected to be 11.02%.

Attractive Financial Sector Yield; Now Just Make Sure ROE Is Rising Although the financial sector is not demonstrating significant profit growth at present, it is recording a median dividend yield of 4.21%. Our global portfolio system indicates that the weighted average dividend yield for the financial sector is an impressive 3.84%. 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.

Very Large Cash Holdings On The Balance Sheet, Especially In The U.S. Finally, in both the U.S. and Canada but especially in the U.S., companies have accumulated significant amounts of cash on their balance sheets as a percent of common equity. This is especially true for the U.S. and Canadian information technology sectors. In the U.S. case, information technology sector companies are frequently what we also call value-added exporters. That is, more than 50% of their revenues come from international operations and emerging economies. In Canada, the two sectors with the most substantial amounts of cash on the balance sheets would be the materials sector and the information technology sector.


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At present, 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. If, however, the Fed can keep bond yields below the ceiling, allowing more time for the U.S. economy to recover and for consumer confidence to improve, then it is possible that these substantial cash holdings are, ultimately, used for mergers and acquisitions, increased dividend payouts, share buybacks and capital investment. It is simply a matter of the U.S. economy appearing stable for long enough that U.S. consumer and business confidence eventually returns.

Exhibit 18. The Last Two Major Bubbles In The U.S.


Info Tech Not A New Mania Yet; Financials Recovering And Galvanized Exhibit 18 summarizes nicely the impact on share prices of the last two major bubbles, specifically the collapse in U.S. info tech prices from 2000 to 2003 and the collapse in financial sector share prices from 2007 until 2009. Both of these sectors in the U.S. are recording profit growth at present and although both areas have risen steadily since market lows of 2009, they remain far below the levels recorded during their respective speculative manias. We often wonder if the massive reorganization of the U.S. financial sector has better positioned the U.S. for dealing with future emerging economy banking crises. Furthermore, despite all the justified concern about the state of the U.S. consumer, the consumer discretionary sector has been one of the leading performers through 2010.

To some extent, however, the U.S. consumer discretionary sector has also benefited from exposure to value-added exporters. There is a large list of blue-chip, large-capitalization, S&P 500 companies that are benefiting from their exposure to emerging economy growth. Their links to emerging economy revenues are fuelling significant profit growth in many cases. This should remain a dominant theme for many years. Our counterparts in the TSX are the energy and materials sectors.

Consumer Discretionary

Info Tech

Financials

S&P 500


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Exhibit 19. Gold And Materials Sector Performance


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. Our recommended asset mix is shown for our various investor profiles in the top right-hand corner of Exhibit 20. 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. It is true, however, that we may be required to change our asset allocation in the next couple of months. North American equity markets are overdue for a correction now or, at least, should mark time. Our long-term, far more significant, outlook, however, depends on all the issues this publication addresses, namely the bond yield ceiling, ROE growth and quantitative easing. Exhibit 20 illustrates the standard format for our basic scenario analysis for asset allocation.

For the purpose of this article, we are focused on our 2011 forecasts, our recommended asset allocation and the implied total portfolio returns. We have indicated target levels for 2012 but these targets are highly dependent on a number of things as we go through 2011. 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.S. bond yields and the need for continued profit growth. We will look seriously at 2012 targets later in 2011 but for now our concern is with getting this year’s levels correct, i.e., 2011.

Small Cap Materials

Gold

TSX Materials

S&P 500 Materials


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Exhibit 20. Basic SAS


We have not yet changed our recommended asset allocation for the various investor profiles outlined in the top right-hand corner of Exhibit 20. It is extremely likely that we will change our recommended asset allocation over the course of the next two to three months. This is especially true if the 10-year U.S. Treasury bond yield level gets any closer to the 3.8% ceiling. In order to provide some indication of our current view with respect to North American stocks, bonds and T-bills, we have decided to focus on only one of the several investor profiles.

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). This is shown just under the blue “optimistic” button allocation asset mix ranges. Within this allowable range we have remained at 40% Canadian equities, 20% U.S. equities and 35% Canadian bonds, as indicated in Exhibit 21. 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%.

When we first introduced the growth investor profile at CIBC, we recommended a 45% Canadian equity exposure, a 20% U.S. equity exposure and a 35% Canadian bond exposure. If our year-end 2011 targets prove to be correct then,


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according to our Scenario Analysis System (SAS) for asset allocation, we would expect a portfolio with the growth-oriented investor profile to achieve a 9.26% total return with a 10.25% standard deviation of returns.

Performance Attribution Exhibit 21 shows the 65% total allocation to U.S. and Canadian equities, with the remainder of 35% invested in Canadian bonds. 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. The Canadian equity component is expected to contribute 5.83% of the total portfolio returns of 9.26% but it also contributes a disproportionately larger portion of the volatility for the total portfolio at 7.35%.

Exhibit 21. Growth – Optimistic (In Local Currency)


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. Our asset mix models play a very important role in determining the timing of our exposure to a variety of asset classes. Our floor and ceiling calculations in Exhibit 5 result from our asset mix modes. It should be noted that we also choose to alter our asset mix exposure anytime we observe significant changes in U.S. bond yield levels and North American corporate profitability. We steadfastly believe that making changes to asset allocation on an arbitrary and infrequent basis (i.e., once a year or once every two years) is extremely dangerous in the current environment. As we have noted often in the last 15+ years, long-term average equity returns were expected to collapse and did collapse starting in 1998 (3.67% p.a. for the S&P 500 since then) and, yet, the S&P 500 recorded rallies and collapses of +57%, –50%, +94%, –57% and +85% since 1998. Understanding and adjusting to these market moves is crucial to investor success.


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Choice Of Optimization Using our SAS optimization techniques, we can optimize the portfolio based on maximizing return, maximizing the Sharpe ratio (return to risk ratio) or maximizing the total portfolio variance. In the last example, we might choose to maximize total portfolio variance in order to reduce the total perceived portfolio risk. In every case, 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. We must stress that the recommended asset mix depends almost entirely on our forecasts. The objective, however, 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. In our case, we do this to see how much our short-term, currently, recommended asset mix varies from the one-year mathematically optimized version based on our own targets and assumptions.

Maximize Returns For example, Exhibit 22 shows our currently recommended exposure to Canadian equities, Canadian bonds and U.S. equities for our growth investor profile, assuming our optimistic set of targets for 2011, while calculating these returns in local currency terms. 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.S. equities instead of our currently recommended 20% and 50% Canadian equities instead of 45%. 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%. Our likely changes in the next few months should be guided by these optimized results. 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.

Exhibit 22. Max Return For A 10% Maximum Total Portfolio Variance



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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, then the recommended weights are found under the column heading Sharpe Max in Exhibit 22. For the purpose of this article, however, we want to consider what the recommended asset allocation would be if our goal were to limit the total portfolio variance.

Using A Growth Profile Allowable Range, Our Targets But Reducing Portfolio Volatility We note in Exhibit 21 that our current recommended asset location based on our 2011 targets implies a 9.26% return with a total volatility of 10.25% standard deviation of returns. A more conservative asset allocation would resemble a constant 45% equities, 45% bonds and 15% T-bill mix. We know from other analysis that that would result in a total portfolio variance of approximately 8%.

If we optimize, therefore, 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). In this case, the Canadian equity allocation remains at 45%, the Canadian bond exposure would be reduced by 5% and AA Canadian corporate bond exposure would rise from 0% to 20%. It appears that in order to reduce the variance of the total portfolio, the optimization system chose to reduce the U.S. equity exposure to zero in favor of Canadian AA corporates; of course, this assumes that our targets for the various asset classes are correct. Nonetheless, it supports our conclusion that, as long as U.S. bond yields remain below the critical ceiling, a large portion of our expected returns should result from Canadian equities.

Exhibit 23. Maximize Return For An 8% Maximum Total Portfolio Variance



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Recent Performance Since August 2010 We are optimistic about the rate of return for U.S. and Canadian equities, as long as the Fed can use the magic of quantitative easing to restrict the upward movement in the 10-year U.S. Treasury. We have a long list of concerns with respect to exogenous risk factors, which could materially change our outlook for stocks and bonds in 2011. 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. Such significant gains in such a short period of time are cause for concern.

In August 2010, we published our Investment Strategy Committee Prequel asset mix document, in which we indicated that bond yields were unlikely to fall any further near term and, in fact, were more likely to rise significantly. 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. From August 2010 until recently the TSX rose approximately 15% and the S&P 500 rose approximately 21%, in local currency terms. Our over-weighted equities exposure benefited the total portfolio return considerably and we managed to avoid, entirely, the 5% loss from U.S. bonds that resulted in just the last four months of 2010 by having no exposure to U.S. bonds in the growth portfolio.

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, usually requiring that we have some exposure in asset classes that we, otherwise, would prefer to avoid. The reason for doing so is, generally, to have some degree of prudent diversification. For example, our relatively traditional growth portfolio held a 35% exposure to Canadian bonds for the purpose of improving diversification. Bond losses in the Canadian bond portfolio were very slight at –0.92% compared with 5% loss from 10-year U.S. Treasury bonds. By maintaining the correct overweight recommendation for stocks and correctly underweighting bonds, we generated a significant 434 bps of outperformance in just four months compared with a fixed 45% equities, 45% bonds and 10% cash asset mix. Naturally, 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. Fortunately, our total portfolio returns for the growth investor profile amounted to 10.78% in a little over a four-month period. This is approximately 434 bps better than a portfolio with a fixed exposure of 45% in equities, 45% in bonds and 10% in T-bills.

The sheer magnitude of these gains relative to a very conservative asset allocation, and especially given the significant incremental returns in a very short period of time, is enough to cause some concern in and of itself. The combination of the rising bond yields in the U.S. and rising stock prices in the U.S. and Canada resulted in massive outperformance from equities relative to bonds. At the risk of being silly, the annualized return from U.S. equities between August 2010 and the present was approximately 61%, while U.S. bonds would have lost over 20% on an annualized basis. In fact, the annualized total growth portfolio returns from August to the present was roughly 27%. Given that the U.S. equity market has now risen 85% from the 2009 lows and bond yields have risen from 2.04% to 3.33% during the same timeframe, we


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are becoming increasingly concerned about how far the North American equity markets can go from here. As we have stated, repeatedly, therefore, our optimistic outlook for North American equities, 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.

Detailed Targets For 2011 Exhibit 24 provides more detail as to the basis for our 2011 targets. 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. Based on a 14,800 TSX price target at year-end, the resulting top-down P/E would be approximately 17.83 times. 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 14.92x and 14x, respectively.

Exhibit 24. 2011 Forecasts

Recent 2011 TSX 13,272 14,800

Earnings 676 830 Top-down P/E (x) 19.6 17.83 Bottom-up GPS P/E Median 17.68 14.92 Weighted Average 19.89 14 Street Fwd P/E (14,800 / 870) - 17.01 Trailing ROE - - Median 8.98 Weighted Average 12.11 Street Fwd ROE Median 12.01 Weighted Average 14.42 Trailing ROE Growth Rate & Fwd (GPS) Median 0.11 0.02 Weighted Average 0.09 0.01

S&P 500 1271 1384 Earnings 79 88 Top-down P/E (x) 16.1 15.73 Bottom-up GPS P/E Median 16.67 14.95 Weighted Average 17.78 14.18 Street Fwd P/E (1,384 / 90.55) 15.28 Trailing ROE Median 15.14 Weighted Average 20.41 Street Fwd ROE Median 15.04 Weighted Average 19.97 Trailing ROE Growth Rate & Fwd (GPS) Median 0.12 0.02 Weighted Average 0.13 0.01

Canada TSX Yield (market cap weighted) 2.39 2.34 T-Bills (%) 0.95 1.28 10-year Bond Yield (%) 3.34 3.44

U.S. S&P 500 Yield (market cap weighted) 1.87 1.91 T-Bills (%) 0.16 0.3 10-year Bond Yield (%) 3.33 3.46

WTI Oil (US$/Bbl) 88.03 93-103 Gold (US$/oz.) 1,369 1,580 C$/US$ 1.0065 0.97-1.03 GPS data calculated through our Global Portfolio System Source: Bloomberg and CIBC World Markets Inc.


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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. The one-year forward ROE levels are roughly 200 bps to 300 bps higher than the current trailing ROE for the TSX. Crucially, this is not the case for the S&P 500 where the ROE levels are considerably higher than the TSX levels at present, but there is no evidence that the S&P 500 ROE is expected to grow significantly from here.

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%. This, too, is a cause for concern. If, however, S&P 500 ROE can simply maintain the current 20% level then this would imply, at least, a 12% internal growth rate in book value. If P/BV ratios were constant, this would imply a 12% rise in the S&P 500 Index price. Since we anticipate some compression in multiple levels, however, the resulting implied rise in the S&P 500 Index level should be on the order of 8% or 9%. After adding in an S&P 500 dividend yield of approximately 2%, we would expect the S&P 500 is capable of posting a 9% to 10% total return for the year. As long as S&P 500 ROE is stable and bond yields remain at satisfactory levels then a respectable rate of return is implied.

We would also expect that given the structural characteristics of the TSX and a number of more favorable economic fundamentals in Canada, our market should continue to trade at approximately 2 P/E multiple points higher than the S&P 500. For example, our 1,384 S&P 500 target divided by $88 of earnings results in a top-down price earnings ratio of 15.73 times. Although S&P 500 aggregate earnings are expected to rise from $79 recently to $88 by year-end 2011, there is little or no evidence of ROE growth. This could change if the U.S. economy begins to demonstrate evidence of self-sustaining growth and companies also begin to deploy the massive quantities of cash on their balance sheets. It would appear, however, that during the next 12 months, 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.

Conclusion To summarize, we remain optimistic about the outlook for North American equities, but it is hard to imagine a time when our view has turned so significantly on just one factor, namely quantitative easing. We believe that the U.S. government is still determined to push the U.S. dollar devaluation further if it can, but it can only do this as long as the 10-year U.S. Treasury remains below the 3.8% level. All things considered, if we drew parallels with the equity cycle which spanned the period from October 2002 to mid-2007, and given also that the U.S. is emerging from recession, 2011 could resemble 2004. The S&P 500 was recording stronger ROE growth at that time and profitability was at relatively higher levels, but then, as now, the key to sustaining the equity cycle was the fact that bond yield stayed in the desired range. We believe, therefore, it would be imprudent to simply set the asset allocation at the beginning of the year and not consider the possibility of significant changes to the asset mix throughout this year. This is really the test that the U.S. Federal Reserve faces. We hope, just as the Fed probably does, that we begin during 2011 to see self-sustaining growth with stable interest rates similar to 2004.

The equity cycle which began in October 2002 extended through the next five years, ending in 2007. Other than 1998 and the stock market low of 2009, the market tended to rise and fall over timeframes of about one-and-a-half to three-year intervals. The current rally is now about 85% since the market low of 2009, two years ago, and the Fed must find a way of sustaining the economic expansion and stock market rally for, at least, another two to three years. Admittedly, its actions are unprecedented, but, so far, the magic of quantitative easing is working.


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TOP PICKS OF 2011

Find CIBC research on Bloomberg, Reuters, firstcall.com CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 (416) 594-7000 and ResearchCentral.cibcwm.com


Company Update

January 17, 2011 Clean Technology

5N Plus, Incorporated Shining Bright In The Land Of Cloudy Sky

VNP supplies 60%-70% of First Solar's CdTe needs and is expected to directly benefit from its aggressive expansion plans. First Solar, the global low-cost producer of solar PV modules and 5N Plus' biggest customer, expects to expand capacity by 92% by 2012 to 2.74 GW annually.

5N Plus is on an aggressive organic growth trajectory. 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. Full contribution from its Firebird expansion is expected in Q1/F12.

5N Plus has $56.7 million in cash and cash equivalents ($1.09 per share) on its balance sheet and generates $15 million-$20 million annually in operating cash flow. We expect the company to continue to use these resources to pursue greenfield expansion and further acquisitions.

5N Plus is trading at an attractive valuation of 10.6x F2012E FD EPS (ex. cash), which is at a significant discount to the peer solar group at 16.7x 2012E FD EPS. Our price target of $8.50 is based on 15.0x F2012E FD EPS (ex. cash) and $1.09 in cash per share.

Stock Price Performance

Source: Reuters All figures in Canadian dollars, unless otherwise stated.


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.

Ian Tharp, CFA 1 (416) 594-7296 [email protected]

Sumeet Mahesh 1 (416) 594-7293 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $8.50 VNP-TSX (1/12/11) $7.21 Key Indices: S&P/TSX Smallcap

3-5-Yr. EPS Gr. Rate (E) 25.7% 52-week Range $4.77-$7.35 Shares Outstanding 45.6M Float 27.0M Shrs Avg. Daily Trading Vol. 89,653 Market Capitalization $329.0M Dividend/Div Yield Nil / Nil Fiscal Year Ends May Book Value $2.85 per Shr 2011 ROE (E) 12.0% LT Debt NA Preferred Nil Common Equity $130.2M Convertible Available No Earnings per Share Current 2010 $0.33A 2011 $0.37E 2012 $0.50E P/E 2010 21.8x 2011 19.4x 2012 14.4x Fully Diluted, Excluding Unusuals EV/EBITDA 2010A 10.9x 2011E 9.3x 2012E 6.8x Company Description 5N Plus develops, produces and recycles high-purity metals and compounds for electronic and solar applications. 5N Plus draws its name from the 99.999% purity of its products. www.5nplus.com

Shining Bright In The Land Of Cloudy Sky - January 17, 2011

31

5N Plus Inc. (VNP-TSX) Sector Outperformer Current Price: $7.21 12- To 18-Month Price Target: $8.50All Figures in CAD$ millions, except per share data

Key MultiplesLTM P/E LTM EBITDA 2011E P/E 2011E EBITDA

5N Plus 15.1x 10.4x 14.5x 9.6xPeers 46.8x 10.3x 38.1x 10.1xFirst Solar 17.9x 12.7x 18.0x 12.3xOperating Performance F2009A F2010A F2011E F2012EReturn on Equity 18.6% 12.0% 11.8% 13.7%Return on Capital Employed 40.2% 24.2% 18.6% 23.2%Gross Margin 50.7% 45.0% 44.9% 45.0%EBITDA Margin 41.3% 32.4% 31.2% 34.4%Operating Margin 41.5% 29.8% 29.1% 31.7%Pre-tax Margin 35.4% 27.3% 27.0% 31.0%Net Margin 30.1% 21.4% 20.7% 22.0%Quality of Earnings F2009A F2010A F2011E F2012E

Cash Realization Ratio1 0.8x 1.1x 0.4x 1.0xP/FCF 43.7x 27.0x -37.7x 20.4xFCF Yield 2.3% 3.7% -2.7% 4.9%Implied Tax Rate 29.7% 30.1% 28.6% 29.0%Interest Coverage 76.2x 113.8x 77.2x 142.4xIncome Statement F2009A F2010A F2011E F2012ERevenue $69.4 $70.8 $81.6 $104.0 $7.21 Rating: SOGross Profit $35.2 $31.9 $36.6 $46.8 $8.50 Dividend: $0.00SG&A $5.3 $7.1 $8.3 $8.3 17.9% Yield: 0.0%R&D $1.2 $1.9 $2.9 $2.8 Price Target Represents: F2009A F2010A F2011E F2012EEBITDA $28.7 $22.9 $25.4 $35.7 P/E: 18.7x 25.6x 23.2x 17.2xInterest Expense $0.4 $0.2 $0.3 $0.2 P/E (less cash): 15.6x 21.1x 19.8x 13.9xDepreciation & Amortization $2.2 $2.5 $2.9 $3.8 Enterprise Value: $329.4 $324.2 $339.3 $323.3EBIT $28.8 $21.1 $23.7 $32.9 EV/EBITDA: 11.5x 14.1x 13.3x 9.0xNet Income $20.9 $15.1 $16.9 $22.9 EV/Sales: 4.7x 4.6x 4.2x 3.1xEPS, Diluted (Ex. Unusuals) 0.45$ 0.33$ 0.37$ 0.50$ P/BV: 3.5x 3.1x 2.7x 2.3xFD S/O 45.9 45.6 46.1 46.1 FCF Yield: 1.9% 3.1% -2.2% 4.2%Cash Flow F2009A F2010A F2011E F2012E Chart: Sales, EBITDA & EBITDA marginOperating cash flow $16.2 $16.8 $7.2 $22.8Capex ($8.7) ($4.6) ($16.0) ($6.5)Changes in working capital ($6.9) ($3.1) ($13.6) ($4.7)

Free Cash Flow2 $7.6 $12.2 ($8.8) $16.3FCF per Share $0.17 $0.27 ($0.19) $0.35Balance Sheet F2009A F2010A F2011E F2012ECash $65.1 $68.0 $57.1 $73.4Total debt $4.5 $4.8 $4.6 $4.6Equity $112.4 $125.7 $143.5 $167.2Net debt (Cash) ($60.5) ($63.2) ($52.5) ($68.7)Net debt per share ($1.32) ($1.39) ($1.14) ($1.49)Net debt/EBITDA -2.1x -2.8x -2.1x -1.9xBook Value Per Unit (FD) $2.45 $2.76 $3.11 $3.62

1 Calculated as CFO divided by Net Income.2 Calculated as CFO less CapexSource: Bloomberg, Company reports and CIBC World Markets Inc.

12-18 Mo Return:Price Target:

Valuation & Outlook

Investment Thesis

Current Price:

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2007

A

2008

A

2009

A

2010

A

2011

E

2012

E

0%

10%

20%

30%

40%

50%

Revenues EBITDA EBITDA Margin

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, Cd and Se and on related compounds such as CdTe and CdSe. 5N Plus products are utilized in a number of electronic applications including Thin-Film photovoltaics (PV) and the radiation detector market. Sales to the solar industry represented 74.4% of total sales in Q2/F2011, the above 70.4% in Q1/F2011 but below 85.2% in Q2/F2010.

Through the Firebird acquisition, Management is targeting three main markets: i) the CIGS-based thin film solar market, ii) the semiconductor wafer market and iii) the germanium market.We estimate these markets to be in excess of $380 mln in size with prospects of substantial future growth. Management indicated that sales into these markets have the potential to double its current annual revenues within the next three years. The recent equity investment in Sylarus has further strengthens this effort.

5N Plus continues to be well capitalized .Its favorable cash position should allow for growth through Greenfield expansions or acquisitions.

Ian Tharp, CFA 416-594-7296 [email protected] Mahesh, MBA 416-594-7293 [email protected]

Source: Company reports and CIBC World Markets Inc.

Shining Bright In The Land Of Cloudy Sky - January 17, 2011

32

Source: CIBC TrendSpotting Matrix, Bloomberg



Company Update

January 17, 2011 Oil & Gas - Intermediate & Junior Producers

Angle Energy Inc. Looking Towards Continued Success In Emerging Central Alberta Viking Play

Angle Energy is an intermediate-sized E&P company (~13,500 Boe/d today). The company's asset base is concentrated in the prolific west central Alberta area, providing the company with a number of light oil and gas targets to develop, as well as a solid ability to control cost.

The emerging focus for the company has been the Viking light oil play in Harmattan. Results from the initial five wells have been impressive, with Angle having up to 195 potential new drilling locations. By 2012, production from this play could reach 5,000 Boe/d of light oil and liquids-rich gas.

Angle is also developing a Cardium light oil play (last well tested at over 1,200 Boe/d) and a number of gas resource plays, including the Wilrich, which posted a marked increase in industry activity over 2010.

While Angle has better-than-average exposure to multiple high-impact developments, its valuation today is at 6.8x 2011E EV/DACF (vs. 7.2x grp) and at 96% of our Risked NAV (vs. 89% grp). We believe Angle will start to trade at a premium over the year with continued success in the Viking.





Adam Gill, CFA 1 (403) 216-3405 [email protected]

Mike Woodward, CA 1 (403) 216-3404 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $9.25 NGL-TSX (1/12/11) $7.87 Key Indices: None

Projected Total Return 17.5% 52-week Range $6.71-$9.20 Shares Outstanding* 71.5M Float 60.4M Shrs Avg. Daily Trading Vol. 290,000 Market Capitalization $562.7M Dividend/Div Yield Nil / Nil Fiscal Year Ends December P+P RLI (years) 11.5 2011 EV/DACF 7.1X Net Debt $167.0M Net Asset Value $8.35 per Shr Net Debt/CF 1.5X Convertible Available No *Basic Cash Flow Per Share Current 2009 $0.90A 2010 $0.93E 2011 $1.39E P/CF 2009 8.7x 2010 8.5x 2011 5.7x DACF ($ mlns.) 2009A $40.4 2010E $65.0 2011E $110.2 EV/DACF 2009 9.9x 2010 11.2x 2011 7.1x Company Description Angle Energy Inc. 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.

www.angleenergy.com/

Looking Towards Continued Success In Emerging Central Alberta Viking Play - January 17, 2011

34

Angle Energy Inc (NGL - TSX) Current Price: C$7.87 Adam Gill, CFA: (403)-216-3405 / [email protected] 12- To 18- Month Price Target: C$9.25 Mike Woodward, CA: (403)-216-3404 / [email protected]

Capitalization And Market Statistics Relative ValuationShare Price $7.87 2010E 2011EShares Outstanding 1. 71.5 NGL Group NGL GroupMarket Capitalization $563 P/CF 8.2x 9.5x 5.3x 6.2xNet Debt 2. $167 EV/DACF 11.3x 11.0x 6.8x 7.2xEnterprise Value $729 EV/Boe/d $75,662 $106,382 $54,085 $74,591Distribution (Current) / Frequency / Yield n/a EV/Boe - Proven 3. $26.74 $36.76Average Daily Trading Volume (50 Day) - TSX Only 290,000 EV/Boe - P + P 3. $14.53 $21.08

Core NAV $4.06Investment Thesis, Key Stock Catalysts and Asset Overview Risked NAV $8.22

P/Risked NAV 96%P/Risked NAV (Group Average) 89%Fiscal Year End December

Financial Flexibility ($MM)Bankers: CIBC, ATB and BMO 2009A 2010E 2011ECash Flow from Operations $40.2 $60.8 $106.4Development Spending 5. $44.3 $187.0 $150.0Total Net Debt at Year-end ($38.3) $163.5 $147.9Total Debt / CF (Y/E Debt To Year CF) (1.0x) 2.7x 1.4x

Group Average 1.7x 1.5xTotal Credit Facility - Current $180.0Total Credit Facility Unutilized (% Of Capacity) - Current $73.7 (41%)

Reserves InformationReserve Engineers: GLJ Petroleum ConsultantsYear-end 2009 Reserves (MMBoe)

Production Proved Developed Producing 16.22009A 2010E 2011E Total Proved (1P) 27.3

Production (Boe/d) Q1 7,645A 8,003A Proved + Probable (2P) 50.2Q2 7,472A 7,290A PDP % of Total Proved 59%Q3 7,552A 10,021A Total Proved % of P+P 54%Q4 7,446A 13,026E 2P Reserve Life - Years 6. 11.5FY 7,528A 9,600E 14,250E FD&A Cost - P+P (incl. FDC) $16.04

Growth 28% 48% Cash Basis Recycle Ratio (Incl FDC) 7. 1.0x% Gas 58% 62% 58% * Reserves are updated for acquisitions/divestitures.

Per-Share Growth -11% 31%Cash Flow Per Share Recent News

2009A 2010E 2011E Jan 6/11 - Announced completion of $60 million public offering of convertible debtCFPS (Diluted) Q1 $0.24A $0.24A Dec 16/10 - Announced operational update and 13,500 Boe/d production goal

Q2 $0.20A $0.21A Nov 10/10 - Announced completion of $25 million flow-through financingQ3 $0.18A $0.20A Nov 2/10 - Released Q3/10 resultsQ4 $0.27A $0.28E Oct 21/10 - Announced $25 million bough deal equity financing

Diluted $0.90A $0.95E $1.48E Oct 20/10 - Announced operational and reserves updateGrowth 6% 55% Management (Ownership: 9.6%)

Name Position Recent PositionsCommodity Assumptions Gregg Fischbuch CEO Brooklyn, Crossfield, TriGasWTI Oil (US$/Bbl) $61.99 $79.51 $85.00 Heather Christie-Burns President & COOCrossfield, Encal, FeketeEdmonton Par Oil (C$/Bbl) $66.42 $77.55 $84.54 Stuart Symon VP, Finance & CLightning, Brooklyn, AvidHenry Hub Gas (US$/MMcf) $3.94 $4.37 $4.75 Elizabeth More VP, Exploration Flagship, Crossfield, EncalAECO Gas (C$/MMcf) $3.99 $3.99 $4.35 Glen Richardson VP, Land Yangarra, Penn West, AmocoExchange Rate (US$/C$) $0.8768 $0.9707 $0.9700 Matthew Mazuryk VP, Engineering Harvest, Penn West, SprouleNetback Analysis ($/Boe) Graham Cormack VP, Operations E4 Energy, E3 Energy, Encal

2009A 2010E 2011E Heather Post Controller PwC, KPMG, Barnwell of CanadaGross Revenue (Net of Trans.) $28.76 $33.75 $39.72Hedging Gains / (Losses) $0.00 $0.36 $0.00 DirectorsRoyalties ($7.24) ($7.37) ($9.49) Name Principal OccupationOperating Costs ($4.49) ($6.00) ($6.25) Edward Muchowski Independent BusinessmanOperating Netback $17.03 $20.73 $23.98 John Gareau Independent BusinessmanG&A ($2.31) ($2.37) ($2.05) Clarence Chow President, AGS Capital Management Interest ($0.09) ($1.21) ($1.48) Noralee Bradley Partner, Osler, Hoskin & Harcourt LLPCap Tax/Other ($0.01) ($0.05) $0.00 Timothy Dunne CFO, Ret. Oil & GasCash Flow Netback $14.61 $17.11 $20.45 Gregg Fischbuch CEO, Angle Energy

Jacob Roorda President & CEO, Canoe Capital

Notes:1. Shares O/S based on most recent quarterly balance (adjusted for recent acquisitions and equity issues). 4) Excludes net acquisitions.2. Net debt includes convertibles and is based on most recent quarterly balance (adj. for recent 5) Equals cash distributions/dividends divided by cash flow. acquisitions and equity issues). 6) Y/E P+P reserves divided by Q4 annualized production. 3. Enterprise value to reserves (based on current reserves, including acquisitions). 7) Year operating netbacks divided by reported P+P FD&A cost, incl. FDC.

Sector Outperformer

Investment Thesis: We have a Sector Outperformer rating on Angle with a 12-18 month target price of $9.25/share as Angle has best in class operating costs (2011E $6.25/Boe vs. group at ~$9.55/Boe), and its asset portfolio has exposure to both high impact natural gas (Falher/Wilrich) and oil (Viking/Cardium) development opportunities. 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.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.Key Assets: Key assets are the Viking drilling inventory of approximately 195 wells in the Harmattan area, Cardium and Ellerslie rights in Ferrier, and tight gas assets at Edson.Relative Valuation: Angle is currently trading at a Price to Risked NAV ratio of 96% and a 2011E EV/DACF multiple of 6.8x (versus the group averages of 89% and 7.2x, respectively). Our 12-18 month price target of $9.25/share is based on a 1.1x target multiple to our Risked NAV of $8.22/share versus the group average of 1.0x.


Looking Towards Continued Success In Emerging Central Alberta Viking Play - January 17, 2011

35

Source: CIBC Trendspotting Matrix, Bloomberg.



Company Update

January 17, 2011 Energy Equipment & Services

Black Diamond Group Limited Accelerating Oil Sands Development Will Drive 2011 Performance

Black Diamond is a leading provider of remote workforce accommodation and workspace solutions in the WCSB and regionally in the U.S. In our view, the company is well positioned to benefit from increased capital spending in the Canadian oil sands and from accelerating resource play development.

We expect oil sands capital investment to accelerate in the coming years. In our view, 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.

In addition to the recent award of a long-term rental agreement for an 800-person remote accommodation project with Suncor Energy, we would not be surprised to see Black Diamond secure additional oil sands awards in coming months and expand its 2011 capital program.

Black Diamond is trading at 6.4x 2011E EV/EBITDA, 14.2x 2011E EPS and 6.3x 2011E CFPS, at a slight premium to the average for its peer group. We have a Sector Outperformer rating on the company.


Source: Reuters All figures in Canadian dollars, unless otherwise stated. 10-106661 © 2010



Jeff Fetterly, CFA 1 (403) 216-3400 [email protected]

Jon Morrison 1 (403) 216-3402 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $24.00 BDI-TSX (1/12/11) $21.72 Key Indices: None

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $16.00-$22.02 Shares Outstanding 16.4M Float 10.6M Shrs Avg. Daily Trading Vol. NM Market Capitalization $356.6M Dividend/Div Yield $1.08 / 4.9% Fiscal Year Ends December Book Value $11.88 per Shr 2009 ROE (E) 9.6% Net Debt $49.7M Preferred Nil Common Equity $195.0M Convertible Available No EBITDA ($ mlns.) Current 2009 $35.4A 2010 $49.7E 2011 $66.9E EV/EBITDA 2009 11.4x 2010 8.1x 2011 6.0x Cash Flow Per Share 2009 $2.33A 2010 $2.66E 2011 $3.45E P/CF 2009 9.3x 2010 8.2x 2011 6.3x 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.S. www.blackdiamondlimited.com

Accelerating Oil Sands Development Will Drive 2011 Performance - January 17, 2011

37

Black Diamond Group (BDI-SO) Sector OutperformerCurrent Share Price: $21.72 Jeff Fetterly, CFA | (403) 216 - 3400 | [email protected] Month Target Price: $24.00 Jon Morrison | (403) 216 - 3402 | [email protected]

All figures in C$ millions except per share data

Segmented Revenue Breakdown Company Description2008 2009 2010E 2011E

Workforce Accommodations $43.4 $45.9 $79.0 $101.8Space Rentals $20.5 $13.7 $40.5 $49.0Energy Services $9.7 $15.4 $17.2 $19.6

Total $73.6 $75.0 $136.7 $170.3

Key Financial Metrics2008 2009 2010E 2011E

EV/EBITDA 8.8x 9.2x 8.6x 6.4xP/CF 8.3x 9.3x 8.2x 6.3xP/E (1) 13.2x 15.8x 20.6x 14.2xBVPS $10.08 $11.25 $11.94 $12.40P/Book 2.2x 1.9x 1.8x 1.8xROE 20.1% 15.1% 9.6% 13.1%ROIC 16.0% 12.3% 8.0% 10.6%

Income Statement Chart 1: Revenue By Geographic Segment (2010E)2008 2009 2010E 2011E

Revenue $73.6 $75.0 $136.7 $170.3EBITDA $34.4 $35.4 $49.7 $66.9Depreciation & Amortization $10.0 $14.6 $21.2 $25.1EBIT $24.4 $20.8 $28.4 $41.8Net Interest Expense $1.5 $1.6 $2.6 $4.8Tax Expense (Recovery) $2.4 ($0.4) $7.9 $10.8Net Income (1) $20.4 $19.7 $18.0 $26.3EPS (fd) (2) $1.65 $1.37 $1.05 $1.53

Distribution Analysis Key Operating Statistics (Current Quarter)2008 2009 2010E 2011E Reported %

Dividends Per Share $1.23 $0.95 $1.06 $1.14 Q3/10 Q3/09 Y/Y

Cash Flow Analysis Total Revenue $31.2 $16.7 87% Cash Flow from Operations $32.8 $33.9 $46.1 $59.8 Less: Maintenance Capital ($1.5) ($3.0) ($4.0) ($5.0) Gross Margin $17.7 $10.8 65%Distributable (Free) Cash Flow $31.3 $30.9 $42.1 $54.8 Gross Margin % 57% 64%

Dividends Paid Out $10.4 $12.8 $17.6 $18.7 EBITDA (1) $12.4 $7.8 60%EBITDA % 40% 47%

CFPS (fd) $2.63 $2.33 $2.66 $3.45Distributable CFPS (fd) $2.51 $2.13 $2.43 $3.16 Cash Flow From Operations $11.6 $7.4 57%

CFPS (fd) (2) $0.67 $0.58Payout Ratios Dividends / Cash Flow 32% 38% 38% 31% EPS (fd) (2) $0.26 $0.20 31% Dividends / Free CF 33% 41% 42% 34%

(1) Adjusted for stock-based compensation and one-time items.(2) Based on adjusted fully diluted figures.

Investment Thesis

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.S. The company has three business segments, Workforce Accommodations, Space Rentals, and Energy Services.

Energy Services13%

Space Rentals30%

Workforce Accommodations

57%

Black Diamond has established itself as one of the leading remote accommodation providers. In our view, the company offers several key attributes for oilfield services investing, including: (1) exposure to a business and competitive landscape with attractive fundamentals; (2) a proven management team that has extensive experience operating within its business; and (3) a robust and visible pipeline of growth opportunities.


Accelerating Oil Sands Development Will Drive 2011 Performance - January 17, 2011

38

Source: CIBC TrendSpotting Matrix, Bloomberg.



Company Update

January 17, 2011 Aerospace & Defense

Bombardier Inc. Bombardier Aircraft Orders Starting To Pick Up; CSeries Risk Well Priced In

BBD has two reportable manufacturing segments: Aerospace (Business Aircraft, Commercial Aircraft, Specialized and Amphibious Aircraft, Customer Services and Flexjet/Skyjet) and Transportation (Rolling Stock, Services, Systems and Signaling for the rail public transit sector).

Order activity at BA has picked up in recent weeks. So far in Q4/F11, BA has received orders for 15 business jets and 15 commercial aircraft. If the business jet operations can return to a book-to-bill ratio of 1:1 in Q1/F12, investors should start to generate strong interest in the stock once again.

Continued strength in emerging market economies (particularly China and the Middle East) is resulting in strong international demand for long-range business jets. BA is well positioned to benefit from this, as the large business jet market represents approximately 80% of its business jet sales.

BBD remains optimistic about order activity and execution of the CSeries launch. Industry surveys continue to suggest favorable demand for the CSeries over the next few years. Our C$7.00 price target is based on C$3.30 for BT, C$2.50 for BA and C$1.20 for the CSeries.


Source: Reuters All figures in US dollars, unless otherwise stated.(C$0.986:US$1)



Michael Willemse, CFA 1 (416) 594-7285 [email protected]

David Galison 1 (416) 956-3548 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target C$7.00 BBD.B-TSX (1/12/11) C$5.39 Key Indices: Toronto

3-5-Yr. EPS Gr. Rate (E) 26.5% 52-week Range C$4.25-C$6.24 Shares Outstanding 1,728.0M Float 1,459.0M Shrs Avg. Daily Trading Vol. 5,763,674 Market Capitalization $9,446.2M Dividend/Div Yield C$0.10 / 1.9% Fiscal Year Ends January Book Value $2.29 per Shr 2010 ROE (E) 15.7% Net Debt $1,481.0M Preferred $347.00M Common Equity $3,991.0M Convertible Available No Earnings Per Share Current 2010 $0.39A 2011 $0.37E 2012 $0.41E P/E 2010 14.0x 2011 14.8x 2012 13.3x Company Description Bombardier Inc. is an internationally diversified manufacturer supplying aerospace and rail transportation equipment and services.

www.bombardier.com

Bombardier Aircraft Orders Starting To Pick Up; CSeries Risk Well Priced In - January 17, 2011

40

Bombardier (BBD.B-TSX) Sector Outperformer Current Price: C$5.39 12- To 18-Month Price Target: C$7.00All Figures in USD$ millions, except per share data unless otherwise stated USD:CAD 0.9852 12-Jan-11

Key Multiples F2011E P/EF2011E EBITDA F2012E P/E

F2012E EBITDA

Bombardier 14.7x 9.6x 13.2x 8.3xAerospace Companies 15.5x 9.7x 17.5x 8.0xDiversified Manufacturers 13.5x 9.4x 12.1x 8.7xTransportation Companies 12.7x 7.5x 11.8x 7.0x

Historical P/ 1yr EPS 12.8xHistorical EV/TTM EBITDA 6.4xOperating Performance F2010 A F2011 E F2012 E F2013 EReturn on Equity 18.5% 15.7% 15.0% 17.2%Return on Capital Employed 23.2% 17.7% 16.6% 18.7%EBITDA Margin 8.1% 8.0% 8.3% 9.4%EBIT Margin 5.7% 5.8% 6.2% 7.4%EBT Margin 4.7% 4.8% 5.1% 6.4%Net Margin 3.6% 3.7% 3.7% 4.4%

Quality of Earnings F2010 A F2011 E F2012 E F2013 ECash Realization Ratio1 0.8x 1.2x 1.8x 1.5xP/FCF 21.1x 69.4x 57.6x 16.9xFCF Yield 4.7% 1.4% 1.7% 5.9%Effective Tax Rate 22.7% 21.4% 27.5% 28.0%Interest Coverage 3.9x 4.0x 4.3x 5.6x Deliveries (units) F2010 A F2011 E F2012 E F2013 EIncome Statement F2010 A F2011 E F2012 E F2013 E Business Aircraft 176 149 152 183Revenue - Consolidated $19,366.0 $17,663.1 $19,460.5 $21,565.3 Commercial Aircraft 121 97 94 105Gross Profit $3,164.0 $2,980.5 $3,269.9 $3,842.4 Amphibious Aircraft 5 5 5 5EBITDA $1,570.0 $1,405.7 $1,621.2 $2,020.9 * Current Backlog - Aerospace $16.2 Q3/F11 AEBIT $1,098.0 $1,017.2 $1,215.2 $1,604.9 *Current Backlog - Transportation $32.7 Q3/F11 AEBT $915.0 $845.2 $994.2 $1,380.5 *US$ blnMinority Interest $9.0 $9.0 $8.0 $8.0 Valuation & OutlookNet Income - Cont. Oper. $698.0 $655.2 $712.8 $958.4 Current Price: C$5.39 Rating: SOFD EPS, (Ex. Unusuals) $0.39 $0.37 $0.41 $0.55 Price Target: C$7.00FD S/O 1,755 1,743 1,743 1,743 12-18 Mo Return: 29.9%

Price Target Represents: F2011 E F2012 E F2013 ECash Flow F2010 A F2011 E F2012 E F2013 E P/E: 19.3x 17.4x 12.9xOperating cash flow (ex WC) $1,223.0 $1,175.2 $1,336.8 $1,666.9 Enterprise Value: C$13,442 C$13,442 C$13,442Capex ($767.0) ($1,037.7) ($1,171.3) ($1,103.6) EV/EBITDA: 10.0x 9.0x 7.1xWorking Capital Investments ($671.0) ($365.3) ($42.5) ($216.6) EV/Sales: 0.8x 0.7x 0.6xFree Cash Flow2 $456.0 $137.5 $165.5 $563.3 P/BV: 3.0x 2.6x 2.2xFCF per Share $0.26 $0.08 $0.09 $0.32 FCF Yield: 1.1% 1.3% 4.5%Balance Sheet F2010 A F2011 E F2012 E F2013 E Consolidated ChartCash And Equivalents $4,054.0 $3,653.9 $3,596.9 $3,763.6Total debt $4,162.0 $4,824.0 $5,304.0 $5,304.0Equity $3,769.0 $4,175.2 $4,751.9 $5,574.3Minority Interest $68.0 $66.0 $66.0 $66.0Preferred Value $347.0 $346.0 $346.0 $346.0Net debt (Cash) $176.0 $1,236.1 $1,773.1 $1,606.4Net debt per share $0.10 $0.71 $1.02 $0.92Net debt/EBITDA 0.1x 0.9x 1.1x 0.8xBook Value Per Unit (FD) $2.15 $2.40 $2.73 $3.201 Calculated as CFO divided by Net Income. 2 Calculated as CFO less CapexSource: Bloomberg, Company reports and CIBC World Markets Inc.

*Bombardier Fiscal Years Ending January 31. Fiscal 2011 = Calendar 2010 for comparative purposes.

Investment Thesis

Bombardier has two reportable manufacturing segments, Aerospace (Business Aircraft, Commercial Aircraft, Specialized and Amphibious Aircraft, Customer Services and Flexjet/Skyjet) and Transportation (Rolling Stock, Services, Systems and Signaling). Management intends to maintain a diversified product strategy with a continued focus on the rail and aerospace markets.

Aerospace: the major growth driver for regional jets beyond F2013 will be reflected by demand from the CSeries. We expect that business jet demand will begin to recover in calendar 2011, albeit at a moderate rate. Growth for business jets beyond F2013 will likely benefit from the introduction of the Learjet 85.

Transportation has been somewhat sheltered from the economic downturn, given that large-scale transit infrastructure is typically funded by the public sector. BA has been negatively impacted by cyclical swings in the aerospace sector. However, Bombardier's diversification strategy has allowed the company to offset weakness in one area with other segments that have a more stable growth and demand profile. Bombardier is actively seeking to grow by providing new products in the company’s traditional markets (North America and Europe) as well as through an increased focus on emerging markets such as Asia.

Michael Willemse, CFA 416-594-7285 [email protected] Galison, MBA 416-956-3548 [email protected]

$0

$500

$1,000

$1,500

$2,000

$2,500

F200

5 A

F200

6 A

F200

7 A

F200

8 A

F200

9 A

F201

0 A

F201

1 E

F201

2 E

F201

3 E

0%2%4%6%8%10%12%

EBITDA EBITEBITDA Margin EBIT Margin

Bombardier Aircraft Orders Starting To Pick Up; CSeries Risk Well Priced In - January 17, 2011

41




Company Update

January 17, 2011 Oil & Gas - International E & P

C&C Energia Ltd. The Right Ingredients For Success

We recently initiated coverage of C&C Energia with a Sector Outperformer rating and now have a 12- to 18-month price target of C$15.75. In our view, CZE is relatively undervalued considering the magnitude of its upcoming exploration program.

CZE's operations are focused in the Llanos, Middle Magdalena and Putumayo basins of Colombia. The company has a 77% average working interest in 766,514 gross acres in nine E&P blocks and produces ~7,000 Bbls/d from two of its four Llanos Basin blocks.

CZE has identified 30 prospects and leads and plans to drill 15 exploration wells in 2011. It approved a 2011 capital investment budget of $130 million to $145 million. Management expects that 2011 production will range from 7,000 Bbls/d-7,300 Bbls/d from the Cravoviejo and Cachicamo blocks.

Our base NAV estimate for CZE, including development of the producing assets, is C$7.17/FD share. We have also included C$8.68/FD share in risked upside (C$20.23/FD share unrisked), which could be realized from 2011 exploration drilling, bringing our price target to C$15.75.





Ian Macqueen, P.Geol. 1 (403) 260-8675 [email protected]

Paul Nielsen 1 (403) 216-3403 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target C$15.75 CZE-TSX (1/12/11) C$11.90 Key Indices: TSXOilGas

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range C$6.70-C$12.73 Shares Outstanding 54.3M Float 29.0M Shrs Avg. Daily Trading Vol. 65,021 Market Capitalization $656.0M Dividend/Div Yield Nil / Nil Fiscal Year Ends December Net Asset Value $15.85 per Shr 2011 ROE (E) NM Net Cash $69.53M Preferred Nil Common Equity NM Convertible Available No Cash Flow Per Share Current 2010 $1.56E 2011 $1.87E 2012 $1.69E P/CF 2010 7.7x 2011 6.5x 2012 7.1x Company Description C&C Energia Ltd. is an independent oil and gas company engaged in the exploration, acquisition, development and production of oil resources in Colombia. www.ccenergialtd.com/

The Right Ingredients For Success - January 17, 2011

43

C&C Energy Ltd. (CZE-TSX-V) Sector OutperformerCurrent Price: C$11.90Price Target: C$15.75 Analyst: Ian Macqueen, P.Geol. Ph: (403) 260-8675 E-mail: [email protected] Return: 32.4% Associate: Paul Nielsen, Ph: (403) 216-3403 E-mail: [email protected]

Financial Statistics And Current Valuation 2010E Net Asset Valuation - 2009Share Price ($) C$11.90 Total Risked Asset Value C$936Weighted Average Diluted Shares O/S 50 Total Risked NAVPS - 10% C$15.85Market Capitalization - $M C$593 P/NAVPS (Risked) 75%Net Debt - $mm (C$57) Target P/NAVPS (Risked) 99%Enterprise Value - $M C$536 Total Unrisked Asset Value C$1,618Float - mm 29 Total Unrisked NAVPS - 10% C$27.40Average Trading Volume (50 Day) 65,021 P/NAVPS (Unrisked) 43%Annual Dividend / Yield C$0.00 / 0.0% Target P/NAVPS (UnRisked) 57%

CIBC Deck 2010E 2011E 2012ENYMEX WTI (US$/bbl) $79.51 $85.00 $85.00NYMEX Gas (US$/mcf) $4.37 $4.50 $4.50FX (US$/C$) $0.97 $0.97 $0.97

Operating Statistics 2010E 2011E 2012EColombian Natural Gas Production - - -Natural Gas (mmcf/d before royalties) - - -Colombian Oil Production 5,842 7,541 6,352Oil & Liquids (bbl/d before royalties) 5,842 7,541 6,352Production (mboe/d before royalties) 5.8 7.5 6.4Natural Gas % 0% 0% 0%Production Per Share (boe/d per MM FD) 117 151 128Production Growth Per Share - % nmf 29% (16%)Production Per Share (boe/d per MM FD) - Debt Adjusted 130 167 141

Financial Statistics - $mm (except per share values) 2010E 2011E 2012EColombia EBITDA $81 $120 $111Total EBITDA $81 $120 $111Total Company Operating Cash Flow (US$mm) $78 $102 $92CFPS (Diluted) $1.56 $1.87 $1.69Operating Income $32 $39 $39Operating EPS (Diluted) $0.64 $0.72 $0.72Net Capex $83 $145 $150Net Capex/Cash Flow - % 107% 143% 163%Free Cash Flow ($5) ($43) ($58)

Debt Analysis 2010E 2011E 2012ENet Debt - $mm ($56) ($13) $45Net Debt/Cash Flow (0.7x) (0.1x) 0.5xNet Debt/EV (0.1x) (0.0x) 0.1x

Valuation 2010E 2011E 2012EEV / DACF 7.0x 6.3x 7.6x Target EV / DACF 9.5x 8.4x 9.9x P/CFPS 7.7x 6.5x 7.1x Target P / CFPS 10.2x 8.6x 9.4x




Company Update

January 17, 2011 Transportation

Canadian Pacific Railway Limited Rail With Option Value

While we are bullish on rails in general as a long-term investment trend, CP is our top pick given its leverage to bulk commodities (i.e., metallurgical coal, potash) and the option value associated with its operating ratio.

CP remains the railway with the best opportunity to improve its operating performance. It is targeting an operating ratio in the low 70% range within the next three to five years (from high 70%s currently). We estimate that every 1-point change in operating ratio is equivalent to $0.15-$0.20 in EPS.

With ~20% of CP's 2011 capital program focused on growth initiatives, we believe the company is well positioned to take advantage of the second leg-up in rail volumes as North American-centric cargo, such as building materials, forestry and automotive, continues to play catch-up.

The diminishing risk of re-regulation in the rail industry bodes well for CP (and the railroad industry). There were concerns in 2010 about increased regulatory oversight of the rail industry as shippers looked to reduce freight rates.





Jacob Bout, CFA 1 (416) 956-6766 [email protected]

Kevin Chiang 1 (416) 594-7198 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $78.00 CP-TSX (1/12/11) $66.25 Key Indices: Toronto

3-5-Yr. EPS Gr. Rate (E) 12.5% 52-week Range $49.58-$67.50 Shares Outstanding 168.8M Float 168.6M Shrs Avg. Daily Trading Vol. 661,115 Market Capitalization $11,184.9M Dividend/Div Yield $1.08 / 1.6% Fiscal Year Ends December Book Value $30.04 per Shr 2011 ROE (E) 11.7% LT Debt $4,389.0M Preferred Nil Common Equity $5,071.8M Convertible Available No Earnings Per Share Current 2010 $3.81E 2011 $4.41E 2012 $5.03E P/E 2010 17.4x 2011 15.0x 2012 13.2x Company Description CP is one of two Canadian Class 1 railways and has a bulk freight orientation. It provides freight services across Canada from Montreal to Vancouver and into key centers in the US Midwest & Northeast. www.cpr.ca

Rail With Option Value - January 17, 2011

45

Canadian Pacific (CP-TSX, CP-NYSE) Sector Outperformer Current Price: C$66.25 Jacob Bout (416) 956-6766 [email protected] 12- To 18-Month Price Target: C$78.00All figures in $ millions, except per share data

Company ProfileShare Price $66.2552 Week High $67.5052 Week Low $49.58Shares Outstanding (Mln) 169Market Capitalization ($ Bln) $11.2

Key Multiples 2010E 2011E 2012ECP P/E 17.4x 15.0x 13.1xPeer P/E 32.7x 17.0x 14.2x

CP P/CF 21.0x 8.2x 7.5xPeer P/CF 10.8x 8.9x 7.9x

CP EV/EBITDA 9.6x 8.4x 7.6xPeer EV/EBITDA 10.4x 8.1x 7.3x

Operating Ratios 2010E 2011E 2012EOperating Ratio 77.4% 76.1% 75.2%Return On Equity 12% 11% 12%Current Ratio 0.92 1.21 1.81Quick Ratio 0.73 1.01 1.61LT Debt/Total Capitalization 45% 37% 34%Dividend Yield 1.4% 1.4% 1.4%

Income Statement 2010E 2011E 2012E Investment ThesisSales 4,973 5,314 5,599EBITDA From Operations 1,619 1,768 1,882Earnings From Operations 645 746 852FD EPS From Operations $3.81 $4.41 $5.03

Cash Flow 2010E 2011E 2012ECFPS $3.15 $8.07 $8.80FCFPS -$1.26 $2.16 $4.07

Balance Sheet Q3/10Cash + ST Investments 268Current Assets 1,084PP&E 11,957Total Assets 13,531Current Liabilities 1,080LT Debt 4,389Total Liabilities 8,459Shareholders' Equity 5,072

Canadian Pacific Railway Company (CP) is one of seven Class 1 North American railroads and the second largest in Canada. The company owns approximately 10,800 miles of track. An additional 4,700 miles of track are owned jointly, leased or operated under trackage rights. Of the total mileage operated, approximately 6,300 miles are located in Western Canada, 2,200 miles in Eastern Canada, 5,800 miles in the U.S. Midwest and 1,200 miles in the U.S. Northeast.

CP’s railway feeds directly into the U.S. from the East and West Coasts. Agreements with other carriers extend its market reach east of Montreal in Canada, through the U.S. and into Mexico. CP transports bulk commodities, merchandise freight and intermodal traffic.

2009A Sales Breakdown

Sulphur & Fertilizer7%

Coal10%

Forestry4%

Intermodal29%

Automotive5%

Grain27%

Industrial Products18%

Operating Ratio

70%72%74%76%78%80%82%84%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

E

2011

E

2012

E

Return On Invested Capital (ROIC)

4%

8%

12%

16%

2002 2003 2004 2005 2006 2007 2008

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). We estimate that every 1-point improvement in CP's operating ratio adds ~$0.15-$0.20 in EPS. CP is targeting an operating ratio in the low 70% range.

DM&E: Expect EBITDA to double from $100 million to $200 million in five years.

Deregulation Of Canadian Grain: Ability to increase “turn” – grain handlers on side.

Potash: Risk of Canpotex diversifying potash contract post-2012 (CP currently the exclusive shipper for Canpotex).

Pension: Pension expense will be headwind over the next three to four years.

Met Coal - 10-year agreement with Teck provides increased stability in the coal division.


Rail With Option Value - January 17, 2011

46




Company Update

January 17, 2011 Real Estate

Chartwell Seniors Housing REIT Leverage To Recovering Occupancy, Discount Valuation Present Unique Appeal

Chartwell Seniors Housing REIT owns and operates almost 24,000 seniors housing suites across Canada (~69%) and the U.S. (~31%). Chartwell focuses primarily on the lighter-care formats of independent supportive living (57%) and assisted living (23%), with the remainder nursing care.

Chartwell's current occupancy and income generation are below historical rates, following credit crisis-driven pressure on the lighter-care retirement operating fundamentals over the past few years. We expect Chartwell could achieve a recovery of as much as 200 basis points of occupancy in 2011.

Chartwell trades at 11.6x 2011E AFFO, well below its large-cap Canadian REIT peer average of 14.6x, and trades at an implied 7.8% cap rate on current (in our view depressed) NOI. Our 12- to 18-month price target is $9.75 or 13.0x-13.5x 2011E FFO, implying a total return of 27%.

We expect recovering occupancy (for CSH and the broader industry), increased investor demand and declining cap rates for seniors housing property, and strong growth in FFO, AFFO and NAV could drive Chartwell units higher in 2011. We rate Chartwell REIT Sector Outperformer.





Alex Avery, CFA, MRICS 1 (416) 594-8179 [email protected]

Troy MacLean, CFA 1 (416) 956-3643 [email protected]

Brad Sturges, CFA 1 (416) 594-7399 [email protected]

Chris Girard, CFA (416) 956-3807 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Overweight 12-18 mo. Price Target $9.75 CSH.UN-TSX (1/12/11) $8.09 Key Indices: None

3-5-Yr. AFFO Gr. Rate NA 52-week Range $6.16-$9.65 Units Outstanding 144.6M Float 140.2M Units Avg. Daily Trading Vol. 250,000 Market Capitalization $1,169.8M Distribution/Distr. Yield $0.54 / 6.7% Fiscal Year Ends December Net Asset Value $7.50 per Unit 2011 RETURNS LT Debt $1,730.3M Preferred Nil Common Equity $605.3M Convertible Available Yes FFO Per Share Current 2009 $0.61A 2010 $0.63E 2011 $0.74E P/FFO 2009 13.3x 2010 12.8x 2011 10.9x AFFO Per Share 2009 $0.69A 2010 $0.59E 2011 $0.70E P/AFFO 2009 11.7x 2010 13.7x 2011 11.6x Company Description Chartwell Seniors Housing REIT owns and operates a large primarily retirement home focused seniors housing portfolio in both Canada and the U.S.

www.chartwellreit.ca

Leverage To Recovering Occupancy, Discount Valuation Present Unique Appeal - January 17, 2011

48

Chartwell Seniors Housing REIT (CSH.UN-TSX) Alex Avery, CFA Stock Rating: Sector Outperformer 12 - 18 month Price Target: $9.75 Per Unit Brad Sturges, CFASector Weighting: Overweight Unit Price - (1/12/2011): $8.09 Per Unit Troy MacLean, CFAMarket Capitalization ($ mlns): $1,169.5 Current Yield: 6.7% Chris Girard, CFA

PRICE TARGET CALCULATION & NAV COMPANY DESCRIPTIONCIBC 2011E FFO: $0.74Target Multiple (2011E FFO): 13.0x-13.5XCIBC Price Target: $9.75Implied 12-18 Month Total Return: 27%

CIBC NAV(E): $7.50 STRATEGYPremium/(Discount) To NAV: 8%Cap Rate: 8.00%

TOTAL RETURN2008 2009 2010 YTD

Price Return (52.4%) 30.2% 15.1%Yield 0.0% 0.0% n/a

Total (52.4%) 30.2% 15.1% INVESTMENT THESIS: SECTOR OUTPERFORMER

REIT MANAGEMENTW. Brent Binions - President and CEOVlad Volodarski - Chief Financial OfficerRichard J. Noonan - Chief Operating Officerwww.chartwellreit.ca

EARNINGS SUMMARY VALUATION MULTIPLESFinancial Metric 2009A 2010E 2011E FFO MULTIPLES 2009A 2010E 2011EFunds From Operations $0.61 $0.63 $0.74 Chartwell Seniors Housing REIT 13.3x 12.8x 10.9xYoY Change (22.8%) 3.3% 17.5%

AFFO MULTIPLES 2009A 2010E 2011EAdjusted FFO $0.69 $0.59 $0.70 Chartwell Seniors Housing REIT 11.7x 13.7x 11.6xYoY Change (4.2%) (14.5%) 18.6%

DEBT MATURITY & LIQUIDITY PROFILE (at Q3/10) LEVERAGE SUMMARYMlns 2010 2011 2012 LEVERAGE SUMMARY Q3/10 Q3/09 LimitMortgages $64.8 $115.1 $175.5 EBITDA Interest Coverage: 1.7x 1.8xConvertible Debentures $0.0 $124.9 * $75.0 D/GBV (w/o convertible debt): 55.2% 54.7% 60.0%Credit Facilities $0.0 $0.0 $0.0 D/GBV (with convertible debt): 61.3% 61.4% 65.0%Total $64.8 $240.0 $250.5Weighted Avg Interest Rate: 5.5% CONVERTIBLE DEBENTURES (at Q3/10)

Issue Interest Rate Amount Conversion MaturityCash & Equivalents $14.9 5.9% Series 5.9% $75.0 $16.25 May 1/12

Undrawn Credit Facilities $72.9Total $87.8

COMPOSITION OF PORTFOLIO OF OWNED & LEASED SUITES (at Q3/10)Same-property Net Operating Income (NOI)

Q3/10 Q3/09 ChangeU.S. LTC NOI (US$) $9,717 $10,571 (8.1%)Cdn Retirement NOI (Cdn $) $26,498 $25,756 2.9%Cdn LTC NOI (Cdn $) $3,194 $3,401 (6.1%)Total NOI (Local $) $39,409 $39,744 (0.8%)

SAME-PROPERTY OCCUPANCYSegment Q3/10 Q3/09 ChangeCanadian Retirement 89.7% 89.2% 50 bpsCanadian Long-Term Care 97.9% 98.1% -20 bpsU.S. Operations 88.9% 89.1% -20 bps

OCCUPANCY HISTORY (SAME-PROPERTY)Year Q1 Q2 Q3 Q42010 90.3% 90.0% 90.4% n/a2009 91.4% 90.1% 90.1% 91.2%2008 93.7% 93.4% 93.2% 93.3%

* $124.9 million of the 2011 convertible debentures will be redeemed in December 2010.

Chartwell Seniors Housing REIT owns and operates a large (~24,000 suite) primarily retirement home focused seniors housing portfolio in both Canada (accounting for ~69% of suites) and the U.S. (~31%).

Chartwell is focusing on maximizing returns from its existing portfolio, where occupancy has eroded. The REIT is also considering acquisition growth in Canada moreso than in the U.S. Future acquisitions are likely to be one-off , in-fill purchases, rather than large portfolios of properties, and the REIT may sell retirement homes in non-core markets, concentrating on Ontario, Quebec, Alberta and B.C. Chartwell is winding down its joint-venture and mezzanine lending relat ionships with Spectrum, Melior and others, in the future engaging in development activity for its own account.

ATTRACTIVE FULLY-COVERED YIELD: CSH yields 6.7%, fully-covered by 2011E AFFO of $0.70.

RESOLUTION OF LEGACY STRUCTURES: The REIT has made considerable progress working through legacy partnerships, which should be substantially resolved in 2011.

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.S.), which could drive considerable growth in FFO and AFFO into 2012 and beyond.

Independent Supportive

Living, 57.0%

Long-Term Care, 20.0%

Assisted Living, 23.0% Alberta ,

3 .0%

BC, 7.0%

Ontario, 39.0%

Quebec, 25.0%

USA, 26.0%

Level of Care Geographic Location

Source: Company reports, ThomsonOne and CIBC World Markets Inc

Leverage To Recovering Occupancy, Discount Valuation Present Unique Appeal - January 17, 2011

49




Company Update

January 17, 2011 Oil & Gas Royalty Trusts/Dividend Corporations

Daylight Energy Ltd. A&D Execution Key To Refocused Asset Base

We believe shares of Daylight represent excellent value at current levels. In addition, we would highlight Daylight as an excellent way to play natural gas defensively, as we believe that investors are currently paying for little or none of Daylight's significant natural gas resource potential.

Potential near-term catalysts include year-end results/reserve reporting (expected in early March). We would also highlight the possibility of Daylight striking a joint venture at Elmworth (AB) to develop its natural gas resource plays.

Key assets include Daylight's Cardium tight oil at Pembina (AB) and its natural gas resource plays at Elmworth (AB), which is prospective for the Nikanassin, Cadomin, Montney, and Bluesky formations. Other notable assets include its Belly River light oil play at Pembina (AB).

Our price target of $13.50/sh is based on a 1.1x target multiple to our Risked NAV (vs. the average of 1.1x). Daylight trades at a P/Risked NAV of 76% and a 2011E EV/DACF multiple of 6.5x (vs. averages of 94% and 9.1x) with a 6.1% yield (vs. the average of 5.3%).





Jeremy Kaliel 1 (403) 260-8657 [email protected]

Jeff (Sizhuo) Shen 1 (403) 221-5047 [email protected]

Diana Chaw 1 (403) 216-8518 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $13.50 DAY-TSX (1/12/11) $9.81 Key Indices: S&P/TSX Energy Trust, S&P/TSX

Income Trust Composite Projected Total Return 36.0% 52-week Range $8.40-$11.68 Shares Outstanding 208.9M Distr. Frequency $0.05 Monthly Avg. Daily Trading Vol. 1,240,000 Market Capitalization $2,049.3M Dividend/Div Yield $0.60 / 6.1% Fiscal Year Ends December P+P RLI (years) 11.0 2011 EV/DACF 6.5X Net Debt $665.1M Net Asset Value $12.95 per Shr Net Debt/CF 1.7X Convertible Available Yes Cash Flow Per Share Current 2009 $1.76A 2010 $1.46E 2011 $1.82E P/CF 2009 5.6x 2010 6.7x 2011 5.4x Cash Dividend Per Share 2009 $0.96A 2010 $0.72E 2011 $0.60E Cash-on-Cash Yield 2009 9.8% 2010 7.3% 2011 6.1% Company Description Daylight Energy Ltd. converted from a trust to a dividend-paying corporation on May 7, 2010.

www.daylightenergy.ca

A&D Execution Key To Refocused Asset Base - January 17, 2011

51

Daylight Energy Ltd. (DAY - TSX) Current Price: C$9.81 Shares O/S(1): $208.9MM Jeremy Kaliel, MBA (403-260-8657) [email protected] 12 To 18 Month Price Target: C$13.50 Market Cap.: $2,050MM Diana Chaw (403-216-8518) [email protected] Dividend (NTM) / Freq. / Yield: $0.6 / mthly / 6.1% Average Trading Vol (50 day): 1,230,000 Jeff Shen (403-221-5047) [email protected]

SUMMARY & INVESTMENT THESIS PROPERTY OVERVIEW

PRODUCTION & RESERVES GROWTH

RELATIVE RISK & MAGNITUDE OF UNBOOKED PROSPECTS

2009A +Net Acq.2010E 2010E 2011E Proved Developed Producing 43.4 44.5

Q1 39,760A $0.38A Total Proved (1P) 77.0 91.3Q2 42,273A $0.37A Proved + Probable (2P) 119.1 162.5Q3 42,052A $0.33A PDP % of Total Proved 56% 49%Q4 40,500E $0.38E Total Proved % of P+P 65% 56%FY 41,150E $1.46E $1.82E 2P Reserve Life - Years2 8.5 11.0

% Gas 57% FD&A - 2P, incl. FDC $26.09Cash Recycle Ratio3 1.2xReserve Engineers: GLJ Petroleum Consultants Ltd.

DEBT & OUTFLOWS VS. INFLOWS5 VALUATION SUMMARY5

Financial Flexibility ($MM) Netback Analysis ($/Boe)2010E 2011E 2010E 2011E

Cash Flow from Operations $283 $381 Gross Revenue (net trans) $43.75 $50.87Capital Spending6 ($325) ($250) Hedging Gains (Losses) $1.83 $1.04Dividends ($139) ($126) Royalties ($12.13) ($13.17)

DRIP $0 $0 Operating Costs ($10.44) ($9.75)Surplus (Deficit) ($181) $5 Operating Netback $23.01 $29.00

Working Capital Deficit $100 $98 G&A ($2.00) ($2.25)Bank Debt $303 $305 Interest ($2.16) ($2.16) Key Valuation Metrics vs. Coverage Group (CIBC Estimates)Senior Notes/Other Debt $247 $247 Cap Tax/Other $0.00 $0.00 EV/ EV/2PNet Debt at Year-end $650 $651 Cash Flow Netback $18.85 $24.59 Share Expected 2011E 2011E 2011E P/Core P/Risked Production ReservesDebt / CF (Y/E Debt, Year CF) 2.3x 1.7x Price Return Yield P/CF EV/DACF NAV NAV ($/Boe/d) ($/Boe)Total Credit Facility (Current) $625 Group avg Operating Netback $30.37 $32.20 Daylight $9.81 44% 6.1% 5.4x 6.5x 158% 76% $64,231 $16.78

Facility Utilized (Current) $280 (45%) Group avg Cash Flow Netback $25.93 $27.68 Group Average 21% 5.3% 8.0x 9.1x 181% 94% $94,174 $22.93

MANAGEMENT (Ownership: 3.1%) NOTESName Position Name PositionAnthony Lambert President & CEO Randy Ford VP, OperationsSteve Nielsen VP, CFO Steve Horner VP, Business ServicesTed Hanbury Executive VP Pamela Kazeil VP, FinanceBrent Eshleman VP, Exploitation Jerry Simpson VP, Production

Sector Outperformer

42,450E51%

Reserves (MMBoe)CFPS (Basic)Production (Boe/d)2011E

Investment Thesis: We have a Sector Outperformer rating on Daylight Energy Ltd. with a 12-18 month price target of $13.50/share. We believe shares of Daylight represent excellent value at current levels. In addition we would highlight Daylight as excellent way to play natural gas defensively, as we believe that investors are currently paying for little or none of Daylight's significant natural gas resource potential. Potential Catalysts: Potential near term catalysts include year-end results/reserve reporting (expected in early March). We would also highlight the possibility of Daylight striking a joint venture at Elmworth (AB) to develop is natural gas resource plays.Key Assets: Key assets include Daylight's Cardium tight oil at Pembina (AB), and its natural gas resource plays at Elmworth (AB) which is prospective for the Nikanassin, Cadomin, Montney, and Bluesky formations. Other notable assets include its and Belly River light oil play at Pembina (AB).Relative Valuation: Daylight is currently trading at a Price to Risked NAV ratio of 76% and a 2011E EV/DACF multiple of 6.5x (versus the group averages of 94% and 9.1x, respectively) while providing a current yield of 6.1% (versus the group average of 5.3%). Our 12-18 month price target of $13.50/share is based on a 1.1x target multiple to our Risked NAV of $12.95/share (less forecast dividends of $0.60/share) versus the group average of 1.1x.

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.

0153045607590

105120135

2005

A

2006

A

2007

A

2008

A

2009

A

(Mmb

oe)

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

(% ch

ange

- YO

Y)

2P Reserves - MMboe (DAY)RPS Growth (DAY)RPS Growth (Avg)

Reserves Growth (Per Share)

05,000

10,00015,00020,00025,00030,00035,00040,00045,000

2007

A

2008

A

2009

A

2010

E

2011

E

(boe

/d)

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

(% ch

ange

- YO

Y)

Production (DAY)PPS Growth (DAY)PPS Growth (Avg)

Production Growth (Per Share)

DAY Risked NAV (C$/Share)

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

US$100/bblC$7.00/mcf

CIBC BaseCmdty Prices

US$50/bblC$4.00/mcf

PriceTarget

Risked NAV

Current Price

"Bluesky" NAV (unrisked)Risked NAVCore NAV

Price to Risked NAV

71%

83% 87%93% 97% 101%104%105% 108%108%112%

77%88%

94%

108%

76%

94%

Perp

etual

Dayli

ght

Penn

Wes

t

Petro

Bakk

en

NAL

Prog

ress

Ener

plus

Peng

rowt

h

Aver

age

Cres

cent

Point Pe

yto

Bayte

x

Bonte

rra

Bona

vista

ARC

Verm

ilion

Trilo

gy

EV/DACF (2011E)

6.4x8.0x 8.1x 8.2x

10.1x12.2x

6.5x 7.0x

11.4x11.4x10.7x9.5x9.3x8.8x 9.1x8.9x 9.1x

Petro

Bakk

en

Dayli

ght

NAL

Peyto

Bona

vista

Peng

rowt

h

Penn

Wes

t

Ener

plus

ARC

Aver

age

Trilo

gy

Verm

ilion

Cres

cent

Point

Bayte

x

Bonte

rra

Perp

etua

l

Prog

ress

0

0.5

1

1.5

2

2.5

3

AET

2011

E

Grou

p Avg

.

Total

Deb

t / Ca

sh F

low

0

0.25

0.5

0.75

1

1.25

1.5

% C

redit

Fac

ility U

tilize

d

D/CF (DAY)D/CF (Group)Credit Line Drawn (DAY)Credit Line Drawn (Group)

25%50%75%

100%125%150%175%200%

DAY

Grou

p

DAY

Grou

p

DAY

Grou

p

DAY

Grou

p

DAY

Grou

p

DAY

Grou

p

DAY

Grou

p

2005 2006 2007 2008 2009 2010E 2011E

Payo

ut Ra

tios

Outflows vs. Inflows4

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

0.0x0.5x1.0x1.5x2.0x2.5x3.0x3.5x4.0x

DAY

Grou

p

DAY

Grou

p

DAY

Grou

p

DAY

Grou

p

Grou

pAv

g.

DAY

Grou

p

2005 2006 2007 2008 2009 2010E

Tota

l Deb

t / Ca

sh F

low

0%25%50%75%100%125%150%175%200%

% C

redit

Fac

ility U

tilize

d

Debt MetricsD/CF (AET)D/CF (Group)Credit Line Draw n (AET)Credit Line Draw n (Group)

(DAY)

(DAY)

Source: Company reports and CIBC World Markets Ltd.

A&D Execution Key To Refocused Asset Base - January 17, 2011

52




Company Update

January 17, 2011 Oil & Gas - Large Cap

EnCana Corporation JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011

EnCana was a big laggard in 2010 as weak gas fundamentals more than trumped the company's strong production growth. Given the weak performance in 2010 and the stock's near-record-low valuation, we believe it is a good time to buy EnCana.

Over the long term, we believe EnCana has the capability to grow 10%+ per year, but given the still relatively weak outlook for natural gas in 2011 we expect growth to be more in the 7% range -- still at the high end of Canadian comparables' growth rates and in line with U.S. peers.

For EnCana to outperform, we need to see some combination of: 1) EnCana landing a large joint venture (reduces capex burden and depicts value); 2) a growth strategy that balances capex and cash flow; and/or, 3) a recovery in natural gas prices. We believe all of these events are likely.

ECA trades at only 77% of our risked NAV estimate and at 6.4x 2011E EV/DACF, a significant discount to its peers. As the market regains confidence in ECA's strategy/asset quality, we believe there is substantial room for the valuation to re-rate to historical levels.


Source: Reuters All figures in US dollars, unless otherwise stated.



Andrew Potter, CFA 1 (403) 221-5700 [email protected]

Kyle Balaux 1 (403) 216-3401 [email protected]

Nick Lupick 1 (403) 221-5049 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $36.00 ECA-NYSE (1/12/11) $29.64 Key Indices: Toronto, NYSE

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $26.02-$35.63 Shares Outstanding 740.0M Float 735.0M Shrs Avg. Daily Trading Vol. 2,844,624 Market Capitalization $21,933.6M Dividend/Div Yield $0.80 / 2.7% Fiscal Year Ends December Net Asset Value $38.41 per Shr 2011 ROE (E) 4.0% Net Debt $7,064.0M Preferred Nil Common Equity $16,885.0M Convertible Available No Earnings per Share Current 2009 $4.62A 2010 $0.98E 2011 $0.87E P/E 2009 6.4x 2010 30.2x 2011 34.1x Cash Flow per Share 2009 $9.29A 2010 $6.21E 2011 $5.67E P/CF 2009 3.2x 2010 4.8x 2011 5.2x Company Description EnCana is a leading North American natural gas producer.

www.encana.com

JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011 - January 17, 2011

54

Encana (ECA-TSX, NYD) Sector OutperformerCurrent Price: $29.64 Analyst: Andrew Potter, CFA Ph: (403) 221-5700 E-mail: [email protected] Target: $36.00 Nick Lupick, Ph: (403) 221-5049 E-mail: [email protected] Return: 21.5% Kyle Balaux, Ph: (403) 216-3401 E-mail: [email protected]

Financial Statistics And Current Valuation 2010E Net Asset Valuation - 2009Share Price ($) $29.64 Total Risked Asset Value $28,282Weighted Average Diluted Shares O/S 740 Total Risked NAVPS - 9% $38.41Market Capitalization - $M $21,926 P/NAVPS (Risked) 77%Net Debt - $mm $6,479 Target P/NAVPS (Risked) 94%Enterprise Value - $M $28,405 Total Unrisked Asset Value $51,928Float - mm 735 Total Unrisked NAVPS - 9% $70.53Average Trading Volume (50 Day) 2,844,624 P/NAVPS (Unrisked) 42%Annual Dividend / Yield $0.80 / 2.7% Target P/NAVPS (UnRisked) 51%

Note: All company figures are in USD unless stated otherwiseCIBC Deck 2009 2010E 2011E 2012E 2013E 2014E 2015ENYMEX WTI (US$/Bbl) US$61.99 US$79.51 US$85.00 US$90.00 US$95.00 US$95.00 US$95.00Edmonton Par (C$/Bbl) $66.42 $77.55 $84.12 $89.07 $94.02 $94.02 $94.02Western Canadian Select (C$/Bbl) $58.61 $67.30 $69.40 $74.23 $75.22 $75.22 $75.22NYMEX Gas (US$/Mcf) US$3.94 US$4.37 US$4.75 US$5.25 US$6.00 US$6.00 US$6.00AECO (C$/Mcf) $3.99 $3.99 $4.35 $4.85 $5.50 $5.50 $5.50CRCK321 (US$/Bbl) US$8.23 US$9.67 US$9.00 US$9.00 US$9.00 US$9.00 US$9.00FX (US$/C$) $0.88 $0.97 $0.97 $0.97 $0.97 $0.97 $0.97

Operating Statistics 2009 2010E 2011E 2012E 2013E 2014E 2015ECanadian Natural Gas Production -mmcf/d 1,855 1,319 1,408 1,713 1,948 2,194 2,332United States Natural Gas Production - mmcf/d 1,616 1,854 1,978 2,060 2,239 2,477 2,678Natural Gas (MMcf/d) 3,471 3,172 3,386 3,774 4,187 4,671 5,010Canadian Oil & Liquids Production (excluding FC & CL) - bbl/d 66,720 13,842 15,000 19,172 22,337 25,921 28,163United States Oil & Liquids Production - bbl/d 11,317 9,838 10,300 10,621 11,541 12,767 13,805SAGD Oil & Liquids Production - bbl/d 29,945 0 0 0 0 0 0Oil & Liquids (bbl/d) 107,983 23,680 25,300 29,793 33,878 38,688 41,968Production - MBoe/d 686 552 590 659 732 817 877Natural Gas % 84% 96% 96% 95% 95% 95% 95%Oil Sands % 4% 0% 0% 0% 0% 0% 0%Production Growth Per Share - % 7% 12% 11% 12% 7%

Financial Statistics - US$mm (except per share values) 2009 2010E 2011E 2012E 2013E 2014E 2015ECanada EBITDA $4,614 $2,013 $1,959 $2,736 $3,604 $4,070 $4,338US Net EBITDA $3,428 $2,768 $2,464 $2,927 $3,746 $4,122 $4,436Integrated EBITDA $824 $0 $0 $0 $0 $0 $0Marketing EBITDA $36 $25 $42 $42 $42 $42 $42Other & International EBITDA ($49) $1,386 ($3) ($3) ($3) ($3) ($3)Corporate & Other EBITDA ($3,093) ($341) ($403) ($434) ($481) ($537) ($576)Hedging (Forecasted) $0 $332 $668 $461 $0 $0 $0Total EBITDA $6,358 $6,183 $4,727 $5,729 $6,909 $7,695 $8,237Total Company Operating Cash Flow $6,984 $4,509 $4,178 $5,100 $6,033 $6,820 $7,360CFPS (Diluted) $9.29 $6.21 $5.67 $6.93 $8.19 $9.26 $10.00Operating Income $3,459 $725 $637 $1,090 $1,617 $1,805 $1,882Operating EPS (Diluted) $4.62 $0.98 $0.87 $1.48 $2.20 $2.45 $2.56Net Capex $5,438 $5,098 $4,159 $4,611 $5,067 $6,264 $6,057Net Capex/Cash Flow - % 78% 113% 100% 90% 84% 92% 82%Free Cash Flow $1,546 ($589) $18 $489 $966 $555 $1,303

Debt Analysis 2009 2010E 2011E 2012E 2013E 2014E 2015ENet Debt - $mm $5,313 $6,479 $7,064 $6,665 $6,288 $6,321 $5,607Net Debt/Cash Flow 0.8x 1.4x 1.7x 1.3x 1.0x 0.9x 0.8x Net Debt/EV 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x

Valuation 2009 2010E 2011E 2012E 2013E 2014E 2015EEV / DACF 6.0x 6.4x 6.4x 5.3x 4.5x 4.1x 3.7x Target EV / DACF 4.6x 7.2x 7.2x 6.0x 5.1x 4.6x 4.2x P/EPS 6.1x 31.3x 35.5x 20.7x 14.0x 12.5x 12.0x Target P / EPS 15.9x 36.7x 41.6x 24.3x 16.4x 14.7x 14.1x


JV & More Restrained Spending Should See ECA Regain Lost Ground In 2011 - January 17, 2011

55




Company Update

January 17, 2011 Merchandising

Jean Coutu Group (PJC) Inc. Low Price, Good Position

Despite its earnings forecasts being significantly impacted by recent Quebec drug reforms, Jean Coutu remains a relatively inexpensive, well-positioned drugstore chain with numerous opportunities for growth.

Earnings will be not much more than flat this year, and Quebec drug reforms will drag a bit on growth in the following year. However, 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.

Jean Coutu is also well positioned to participate in national drugstore consolidation. Its expertise in front-store merchandising, its strong buying practices, its narrow focus and its good franchisee relations might make Coutu a welcome addition to the national scene.

Over the next 12 months, we expect at least one sizeable national transaction, and possibly a few Quebec deals as pharmacy economics make size and scale more critical attributes. We would be surprised if PJC was not an active participant, paying reasonable prices.





Perry Caicco 1 (416) 594-7279 [email protected]

Eric Balshin 1 (416) 956-6108 [email protected]

Mark Petrie, CFA 1 (416) 956-3278 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $11.50 PJC.A-TSX (1/12/11) $9.30 Key Indices: None

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $7.88-$10.24 Shares Outstanding 233.4M Float 111.1M Shrs Avg. Daily Trading Vol. 425,800 Market Capitalization $2,170.6M Dividend/Div Yield $0.22 / 2.4% Fiscal Year Ends February Book Value $2.39 per Shr 2011 ROE (E) 31.9% Net Debt $219.8M Preferred Nil Common Equity $558.1M Convertible Available No Earnings Per Share Current 2010 $0.70A 2011 $0.76E 2012 $0.76E P/E 2010 13.3x 2011 12.2x 2012 12.2x Excludes Rite Aid. Company Description Jean Coutu is the largest drug retailer in Quebec and owns a 28.4% equity stake in Rite Aid, one of the largest pharmacy chains in the U.S.

www.jeancoutu.com

Low Price, Good Position - January 17, 2011

57

Jean Coutu Group Inc. (PJC.A-TSX) Sector OutperformerCurrent Price: C$9.30 Perry Caicco (416-594-7279) [email protected] To 18-Month Price Target: C$11.50 Mark Petrie, CFA (416-956-3278) [email protected]

Eric Balshin (416-956-6108) [email protected] figures in millions except per share data

Comparable Analysis Key Ratios Investment Thesis

LY TY NY F2010 F2011e F2012e PJC is the dominant drugstore chain in Quebec, and ownsP/E ratio ROE 34.3% 31.9% 26.8% a growing generic drug manufacturing business.

Jean Coutu (ex .RAD) 13.3x 12.3x 12.2x ROA 16.5% 17.4% 15.7% Over the next few months, drug reimbursement policies inShoppers 14.6x 14.5x 14.6x After-Tax ROIC 22.8% 23.3% 20.6% Quebec will trim the company's earnings, but the impact isUS peers 15.2x 14.4x 12.9x Current Ratio 1.5x 1.7x 1.9x one-time.

EV/EBITDA Net Debt/EBITDA 0.7x 0.7x 0.5x Drug reform in Quebec continually weakens independentsJean Coutu (ex. RAD) 8.0x 7.5x 7.7x Net Debt/Capital 28.2% 26.5% 17.9% and puts PJC into a stronger position for acquisitions.Shoppers 8.7x 8.5x 8.4x BV/Share $2.16 $2.49 $3.01 Longer-term, PJC is well-positioned to make sizable acquisitionsUS peers 9.4x 8.7x 8.0x FCF $160.4 $157.7 $155.3 outside of Quebec.

New Store Development Market Information ManagementF2010 F2011e F2012e Shares Outstanding 233.4 Jean Coutu Chairman

Total Store Count 370 398 424 Float 111.1 Francois J. Coutu President and CEOEstimated Sq. Ft. 2,647 2,892 3,112 Market Capitalization 2,170.6$ Andrew Belzile EVP, Finance and Corp. Affairs

Y/Y Sq. Ft Increase 6.22% 9.26% 7.61% Net Debt 219.8$ Alain Lafortune EVP, Purchasing and MarketingAvg Store Size (Thousands) 7.15 7.27 7.34 Enterprise Value 2,390.4$ Normand Messier EVP, Network Operations

Performance Summary Valuation - F2012E NAV

Anuual Review Q3/F11 ReviewF2010 F2011e F2012e Actual Estimate Q3/F10 Multiple

Same-Store Sales Growth CDN Operations 277.2$ 9.0x 2,495.0$ 10.93$ Prescriptions 5.7% 1.4% -3.9% 0.7% 3.0% 6.5%Front-Store 2.8% 0.0% 2.0% -1.7% -3.0% 6.6% Price/Share # of Shares

Total 4.5% 1.1% 0.2% 0.1% 0.8% 6.3% Rite Aid stake 0.99$ 252.0 246.2$ 1.08$

Square Footage Growth Sub-Total 2,741.2$ 12.01$ Total 6.2% 9.3% 7.6% 8.8% 8.8% 5.8% Net (Debt) Cash (149.6)$ (0.66)$

Prescriptions 2,282.2 2,370.1 2,389.6 597.4 611.4 579.6 Total Pre-Tax Realizable Value 2,591.6$ 11.36$ Front-store 1,355.1 1,395.7 1,490.7 348.1 341.9 343.6 Note: Conversion to CAD$ at Current Spot Rate of: 1.014$ USD/CAD

Total Retail Sales 3,637.3 3,765.8 3,880.3 945.5 953.4 923.2 Coutu CalculatorNext 12m F2012E

Distribution Sales (Inc. Pro Doc) 2,298.4 2,338.7 2,337.7 614.7 636.1 616.1 PJC/A current share price, CAD 9.30$ 9.30$ Other Revenue 244.7 244.6 254.8 62.6 62.9 62.0 RAD current share price, USD 0.99$ 0.99$

Total Revenue 2,543.1 2,583.3 2,592.5 677.3 699.0 678.1 Current USD/CAD exchange rate 1.014 1.014

Value of RAD per PJC share, CAD 1.08$ 1.08$ Gross Margin 473.2 502.1 511.9 131.9 128.9 123.5 PJC Canada price per share, CAD 8.22$ 8.22$

% of Sales 13.01% 13.33% 13.19% 13.95% 13.53% 13.38% PJC shares o/s 227.9 228.2 SG&A Expenses 217.1 231.3 248.8 59.6 57.7 55.2 Net Debt (Cash) 179.1$ 149.6$

% of Sales 5.97% 6.14% 6.41% 6.30% 6.05% 5.98% PJC Canada EV, CAD 2,053.0$ 2,025.9$ Amort of Fran Incentives 12.7 14.6 14.1 3.8 3.6 3.2 PJC Canada EBITDA estimate 269.4$ 277.2$

PJC Canada EV/EBITDA 7.6x 7.3xEBITDA 268.8 285.4 277.2 76.1 74.9 71.5

% of Sales 7.39% 7.58% 7.14% 8.05% 7.85% 7.74%

D&A 17.6 17.2 19.4 4.3 4.4 4.6Interest Expense -4.2 1.6 3.5 -0.3 0.7 -0.4Tax Expense 74.9 75.0 66.5 20.3 18.0 19.5

Net Earnings 165.4 177.0 173.8 47.2 48.2 43.9

Loss From Rite Aid -55.2 0.0 0.0 0.0 0.0 0.0

EPS Excl. RAD Loss 0.70$ 0.76$ 0.76$ 0.20$ 0.21$ 0.19$ # of Shares O/S, Diluted 236.2 233.9 228.2 233.4 233.4 236.2

EBITDA F2012E Value CAD

Value/Share CAD

$-

$5

$10

$15

$20

Shar

e pric

e

5x

7x

9x

11x

13x

For

ward

EV/

EBIT

DA

Rite Aid share price, in CAD PJC.a share price, in CADEV/ Next 12m EBITDA, PJC

Current EV/Next 12m EBITDA 7.6x

Source: Company reports, Bloomberg and CIBC World Markets Inc.

Low Price, Good Position - January 17, 2011

58




Company Update

January 17, 2011 Precious Metals

Kirkland Lake Gold Inc. Rebuilding In A Classic High-grade Camp

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. With two sources of ore, including the high-grade South Mine Complex, the build-out of production won't be constrained by ore availability.

Long-term prospects for continued reserve growth are strong, given KGI's control of most of the key ground where it operates. Drilling continues to intersect mineralization that is among the highest concentrations in the world, with results that are reminiscent of the Red Lake mine.

Production plans remain on track for growth to the 200,000 oz. annual level within two years, which should vault KGI into intermediate producer status. We foresee prospects for expansion beyond these figures and delivery of production will be the key driver for share price performance.

We think KGI trades at attractive multiples relative to its upside potential for growth in production as well as reserves. The company's shares offer good leverage to gold price movements, with the added prospect of finding high-grade mineralization where the hit ratio has been >80%.





Barry Cooper 1 (416) 956-6787 [email protected]

Khaled Sultan 1 (416) 594-7297 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Overweight 12-18 mo. Price Target $22.00 KGI-TSX (1/12/11) $14.72 Key Indices: None

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $6.25-$16.19 Shares Outstanding 68.2M Float 67.0M Shrs Avg. Daily Trading Vol. 260,000 Market Capitalization $1,003.6M Dividend/Div Yield Nil / Nil Fiscal Year Ends April Book Value $2.34 per Shr 2010 ROE (E) NM LT Debt NA Preferred Nil Common Equity $159.4M Convertible Available No Earnings per Share Current 2010 ($0.30A) 2011 $0.30E 2012 $1.10E P/E 2010 NM 2011 49.1x 2012 13.4x Cash Flow per Share 2010 ($0.21A) 2011 $0.53A 2012 $1.53E P/CF 2010 NM 2011 27.8x 2012 9.6x Company Description Kirkland Lake Gold Inc. is an operating gold mining company located in Canada. The company's flagship mine is the Macassa Mine located in Kirkland Lake, Ontario. www.klgold.com

Rebuilding In A Classic High-grade Camp - January 17, 2011

60

Kirkland Lake Gold Date Source: Company reports and CIBC World Markets Inc.KGI-TSX Share Price

Rating Sector Outperformer Barry Cooper - 1 (416) 956-6787 - [email protected] Khaled Sultan - 1 (416) 594-7297 - [email protected]

All figures in C$ million, unless otherwise stated. Gold price assumption in yr 2010 @ US$1225, yr 2011@ US$1600, and yr 2012 @ US$1700Risk adjusted discount rates vary from 8% to 15% depending on the location of the asset and its technical challengesMultiples P/NAV* P/NAV** 2010 PE 2011 PE 2010 PCF 2011 PCF Investment ThesisKirkland Lake 1.5 x 1.8 x NEG 54.4 x NEG 26.9 xNorth American Average 1.6 x 2.3 x 49.8 x 109.4 x 22.9 x 17.9 xLarge Cap Average (>$10B) 1.7 x 2.5 x 73.0 x 28.2 x 27.8 x 15.1 xMid Cap Average ($2B-$10B) 1.8 x 2.7 x 18.2 x 40.8 x 18.6 x 13.8 xSmall Cap Average (<$2B) 1.2 x 1.8 x 19.8 x 172.0 x 9.7 x 14.5 xLarge Cap Average > 1M oz 1.5 x 2.2 x 49.2 x 37.0 x 21.7 x 16.3 xIntermediate Producers 0.2-1 M oz 1.6 x 2.7 x 38.7 x 39.7 x 26.7 x 16.5 xSmall Producers < 0.2M oz 2.3 x 3.6 x 33.9 x 501.6 x 19.6 x 20.9 x* Cash Adjusted NAV Multiples Using: US$1200/oz Gold Pricing And 5% Discount Rates** Using: US$1200/oz @ Risk Adjusted Discount Rates

5% Discount Risk Adjusted DiscountP/NAV Sensitivity P/NAV P/NAV P/NAV P/NAV P/NAV P/NAV Production ProfileAvg. Gold Px - US$ $1,000 $1,100 $1,300 $1,000 $1,100 $1,300Kirkland Lake 2.5 x 1.9 x 1.2 x 3.0 x 2.3 x 1.5 xNorth American Average 2.3 x 1.9 x 1.4 x 15.4 x 2.9 x 2.0 xLarge Cap Average (>$10B) 2.4 x 2.0 x 1.5 x 3.5 x 2.9 x 2.2 xMid Cap Average ($2B-$10B) 2.4 x 2.0 x 1.6 x 3.8 x 3.2 x 2.3 xSmall Cap Average (<$2B) 1.8 x 1.5 x 1.0 x 24.9 x 2.4 x 1.3 xLarge Cap Average > 1M oz 1.9 x 1.7 x 1.4 x 2.7 x 2.4 x 2.0 xIntermediate Producers 0.2-1 M oz 2.5 x 2.0 x 1.4 x 48.9 x 3.4 x 2.2 xSmall Producers < 0.2M oz 2.9 x 2.6 x 2.1 x 4.6 x 4.0 x 3.2 x

EV Statistics - US$ EV ($mln) EV/Prod EV/2P* EV/R&R**Kirkland Lake $953 $6,541 $683 $400North American Average $9,403 $834 $491Large Cap Average (>$10B) $8,916 $495 $360Mid Cap Average ($2B-$10B) $9,203 $652 $349Small Cap Average (<$2B) $5,016 $882 $524Large Cap Average > 1M oz $9,742 $525 $296Intermediate Producers 0.2-1 M oz $8,344 $557 $348 Production (2011E)/Resource DetailSmall Producers < 0.2M oz $9,085 $1,221 $277 Asset Production* Cash Costs** 2P M & I* Proven & Probable Reserves ** Reserves and Resources Macassa and SMC 146 631 1,397 2,269

Total 146 $631 1,397 2,269Income Statement F2010A F2011E F2012E F2013E * Gold (000s oz) 2P: Modeled Proven & Probable Reserves (000s oz)Gold Price Assumptions US$ $975 $1,225 $1,600 $1,700 ** Net of by product credits (if applicable) M & I: Modeled Measured + Indicated Resources (000s oz

Production (000s ounces) 45 93 146 185 NAV Breakdown - US$ Gold Price of: 1,200Cash Costs US$/oz $1,134 $720 $647 $625 Ownership Discount Rate US$ Millions Per ShareCapital Expenditures $34 $58 $32 $32 Current AssetsRevenues $52 $121 $246 $332 Cash 43 0.63Expenses

Operating Expenses 57 71 99 122 Mining AssetsD,D&A, Reclamation 4 8 16 20 Macassa and SMC 100% 5% 577 8.47S,G&A 3 3 4 5 Kirkland Lake Land 100% 50 0.73Exploration 5 6 6 6 Total Assets 671 9.83

Total Expenses 68 87 125 153Liabilities

Income Before Tax -17 34 121 178 LT Debt 0 0.00Income Taxes 0 11 40 60 Reclamation 3 0.05

Net Income -17 23 80 118 Total Liabilities 3 0.05

EPS -0.30 0.30 1.10 1.64 Net Asset Value 667 9.79CFPS -0.21 0.53 1.53 2.21

Asset LocationsShares Outstanding 63 68 68 68

January 12, 2011

KGI is re-developing the Macassa mine in Kirkland Lake into an operation that will likely be better than when it operated for 65 years in the mid to late 1900s. With two major source areas for gold, the build-out of production will not be constrained by stope availability once the expansions are complete in a few years. The high-grade nature of the new South Mine Complex offers up some interesting prospects for grade enhancement at the mine. The company continues to intersect gold mineralization that is among the highest concentrations in the world. We believe that as production is realized the market will recognize that this camp is worthy of similar multiples afforded operations in Red Lake where market multiples are high. KGI offers good leverage to gold price movements with the added prospect of finding high-grade mineralization. We believe that its operations have a higher-than-normal degree of delivery on forecast projections made by the company. A low float in shares makes it particularly vulnerable to high volatility for good news flow which we expect will be coming as plans and actions take place.

CAD 22.00

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Rebuilding In A Classic High-grade Camp - January 17, 2011

61




Company Update


NAL Energy Corporation Cardium First Mover Our Top Higher-yielding Pick

With a 6.5% yield (vs. the average of 5.3%), attractive Cardium acreage, and a strong balance sheet, NAL is our top pick for yield-focused investors. Supporting its yield is a total payout ratio of 107% (vs. the average of 122%) and a 2011E D/CF ratio of 1.5x (vs. the average of 1.9x).

Potential near-term catalysts include 2011 guidance and an operational update (expected January 25, after mkt.), as well as year-end results/reserve reporting (expected March 9, after mkt.). We believe NAL's track record of operational execution bodes well for the upcoming update.

Key assets include NAL's Cardium tight oil at Garrington & Cochrane (southern AB) and its conventional Mississippian light oil play (southeast SK). Other notable assets include its Viking light oil play at Provost/Irricana (AB), its Wabamun oil asset (AB), and its Doig gas play (northeast BC).

Our price target of $16.00/sh is based on a 1.1x target multiple to our Risked NAV (vs. the average of 1.1x). NAL trades at discounted P/Risked NAV of 87% and a 2011E EV/DACF multiple of 7.0x (vs. averages of 94% and 9.1x) with a 6.5% yield (vs. the average of 5.3%).








Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $16.00 NAE-TSX (1/12/11) $13.02 Key Indices: S&P/TSX Energy Trust, S&P/TSX

Income Trust Composite Projected Total Return 29.3% 52-week Range $9.68-$14.95 Shares Outstanding 146.6M Distr. Frequency $0.07 Monthly Avg. Daily Trading Vol. 450,000 Market Capitalization $1,908.7M Dividend/Div Yield $0.84 / 6.5% Fiscal Year Ends December P+P RLI (years) 11.0 2011 EV/DACF 7.0X Net Debt $496.9M Net Asset Value $15.04 per Shr Net Debt/CF 1.5X Convertible Available Yes Cash Flow Per Unit Current 2009 $2.15A 2010 $1.87E 2011 $2.15E P/CF 2009 6.1x 2010 7.0x 2011 6.1x Cash Distribution Per Unit 2009 $1.12A 2010 $1.08E 2011 $0.84E Cash-on-Cash Yield 2009 8.6% 2010 8.3% 2011 6.5% Company Description NAL Energy Corporation converted from a trust to a dividend-paying corporation on December 31, 2010.

www.nal.ca

Cardium First Mover Our Top Higher-yielding Pick - January 17, 2011

63

NAL Energy Corp. (NAE - TSX) Current Price: C$13.02 Shares O/S(1): 146.6MM Jeremy Kaliel, MBA (403-260-8657) [email protected] 12 To 18 Month Price Target: C$16.00 Market Cap.: $1,909MM Diana Chaw (403-216-8518) [email protected] Dividend (NTM) / Freq. / Yield: $0.84 / mthly / 6.5% Average Trading Vol (50 day): 450,000 Jeff Shen (403-221-5047) [email protected]






% Gas 52% FD&A - 2P, incl. FDC $27.87Cash Recycle Ratio3 1.2xReserve Engineers: McDaniel & Associates Consultants

DEBT & OUTFLOWS VS. INFLOWS5 VALUATION SUMMARY5


Cash Flow from Operations $269 $318 Gross Revenue (net trans) $45.92 $51.25Capital Spending6 ($210) ($215) Hedging Gains (Losses) $2.26 $1.16Dividends ($155) ($124) Royalties ($8.35) ($9.28)

DRIP $23 $21 Operating Costs ($11.00) ($11.00)Surplus (Deficit) ($73) ($1) Operating Netback $28.84 $32.13

Working Capital Deficit $38 $36 G&A ($1.50) ($1.50)Bank Debt $234 $237 Interest ($2.27) ($2.26) Key Valuation Metrics vs. Coverage Group (CIBC Estimates)Senior Notes/Other Debt $195 $195 Cap Tax/Other ($0.52) ($0.31) EV/ EV/2PNet Debt at Year-end $467 $468 Cash Flow Netback $24.55 $28.07 Share Expected 2011E 2011E 2011E P/Core P/Risked Production ReservesDebt / CF (Y/E Debt, Year CF) 1.7x 1.5x Price Return Yield P/CF EV/DACF NAV NAV ($/Boe/d) ($/Boe)Total Credit Facility (Current) $550 Group avg Operating Netback $30.37 $32.20 NAL $13.02 29% 6.5% 6.1x 7.0x 183% 87% $77,611 $23.36


MANAGEMENT (Ownership: 0.2%) NOTESName Position Name PositionAndrew B. Wiswell President & CEO Marlon J. McDougall VP, Operations & COOKeith A. Steeves VP Finance & CFO John C. Koyanagi VP, Business Dev

31,000E50%


Sector Outperformer

Investment Thesis: We have a Sector Outperformer rating on NAL Energy Corp. with a 12-18 month price target of $16.00/share. With a 7% yield (vs. the average of 5.3%), attractive Cardium acreage, and a strong balance sheet, NAL is our top pick for yield focused investors.Potential Catalysts: Potential near term catalysts include 2011 guidance and an operational update (expected on Jan. 25th, after mkt.), as well as year-end results/reserve reporting (expected on Mar. 9th, after mkt.). We believe NAL’s track record of operational execution bodes well for the upcoming update, and evidences its high-quality asset base.Key Assets: Key assets include NAL’s Cardium tight oil at Garrington & Cochrane (southern AB), and its conventional Mississippian light oil play (southeast SK). Other notable assets include its Viking light oil play at Provost/Irricana (AB), its Wabamun oil asset (AB), and its Doig gas play (northeast B.C.).Relative Valuation: NAL is currently trading at a Price to Risked NAV ratio of 87% and a 2011E EV/DACF multiple of 7.0x (versus the group averages of 94% and 9.1x, respectively) while providing a current yield of 6.5% (versus the group average of 5.3%). Our 12-18 month price target of $16.00/share is based on a 1.1x target multiple to our Risked NAV of $15.04/share (less forecast dividends of $0.86/share) versus the group average of 1.1x.


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Cardium First Mover Our Top Higher-yielding Pick - January 17, 2011

64




Company Update

January 17, 2011 Multi-Industry

Onex Corporation Expecting NAV Growth To Accelerate And NAV Discount To Narrow

We believe that Onex's NAV growth will accelerate in 2011 as: 1) conditions for monetization opportunities become more attractive; 2) the rebound in manufacturing activity takes hold; 3) additional fees are earned from new funds; and, 4) recently invested cash starts to earn a return.

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. IPO conditions are improving with rising equity markets and there are many corporations and private equity firms flush with cash.

We are of the opinion that the discount to NAV should narrow as well. Onex trades at a 12% discount to NAV, 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.

The greatest risks to our call are a collapse in manufacturing activity and a lack of appetite for IPOs. Current trends suggest that those two factors are heading in the right direction for Onex. Our $40.25 price target implies a return to target of 28.4%, the highest in our coverage universe.





Paul Holden, CFA 1 (416) 594-8417 [email protected]

Kevin Cheng, CFA 1 (416) 956-6676 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $40.25 OCX-TSX (1/12/11) $31.35 Key Indices: Toronto

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $24.02-$31.65 Shares Outstanding 118.3M Float 89.3M Shrs Avg. Daily Trading Vol. 230,000 Market Capitalization $3,708.7M Dividend/Div Yield $0.11 / 0.4% Fiscal Year Ends December Net Asset Value $35.59 per Shr 2011 ROE (E) NM Net Cash $513.00M Preferred Nil Common Equity $1,540.0M Convertible Available No Earnings Per Share* Current 2009 $0.92A 2010 ($0.17E) 2011 $1.03E P/E 2009 34.1x 2010 NM 2011 30.4x * From continuing operations. Company Description Founded in 1984, Onex Corporation is one of North America's oldest and most successful private equity and alternative asset managers.

www.onex.com

Expecting NAV Growth To Accelerate And NAV Discount To Narrow - January 17, 2011

66

Onex Corp. (OCX - TSX) Sector OutperformerC$31.35 Paul Holden, CFA (416-594-8417) [email protected]

12- To 18- Month Price Target: C$40.25 Kevin Cheng, CFA (416-956-6676) [email protected] figures in millions except per share dataNet Asset Value 2008A 2009A 2010A 2011E Company Profile

NAV 31.10 32.70 35.37 38.97P/NAV 0.6x 0.7x 0.9x 0.8xY/Y chg in NAV 3.7% 5.2% 8.2% 10.2%

Committed Onex' Investment ThesisInvestment Structure (US$) Capital ShareDirect Investments na 423Onex Partners I 1655 400Onex Partners II 3450 1400Onex Partners III 4300 800ONCAP II 574 252Onex Real Estate Partners 318 277Onex Credit Partners 875 255

Shares Market NAV Summary NAV By Industry NAV: Public Companies Owned Price Value (C$) / shareEmergency Medical Serv ices 4.8 67.12 318 2.68 Spirit Aerosystems Inc. 8.6 22.42 190 1.61 Celestica 17.8 9.55 170 1.44 Skilled Healthcare Group Inc. 3.5 11.42 39 0.33 Unrealized carried interest 48 0.41 Total Public Companies 765 6.47

LTM EV Value at NAV NAV: Private Companies & Other EBITDA2 / EBITDA Cost (C$) / shareSitel Worldwide 114.0 8.5 340 2.87Allison Transmission 619.0 8.1 250 2.11Husky Injection Molding Systems 197.0 3.9 191 1.61Hawker Beechcraft 96.0 31.3 244 2.06Carestream Health 470.0 4.3 191 1.61The Warranty Group na na 175 1.48RSI Home Products na na 133 1.12TMS International 115.0 5.5 109 0.92ResCare Inc. na na 113 0.96Tropicana Las Vegas na na 59 0.50 Historical Premium / Discount To NAV Tomkins na na 354 2.99Markup For Private Investments - - 267 2.26Center for Diagnostic Imaging 38.0 3.6 21 0.18Total Private Companies 2,447 20.69

Onex Real Estate Partners 97 0.82Onex Credit Partners 97 0.82ONCAP II 211 1.78Other Investments 80 0.68Cash and Near-Cash 513 4.34Total NAV 4,210 35.59Current Price 31.35Premium / Discount to NAV -11.9%

Current Price :

Onex is a private equity firm that invests its own capital alongside third-party capital raised through its Onex Partners and ONCAP fund families. The company was founded in 1984 and has produced a 29% annual rate of return on its investments. The management of third-party capital also produces management fees and the potential for carried interest.

Management has a long history of creating value, having produced a 29% IRR since 1984. This ability to create value and grow NAV warrants a valuation that is at a premium to NAV. Onex Corp is currently trading at a discount to NAV of 11.9% .

The economics for Onex Corp. 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, Onex Partners III.There is ample capital available for management to create value with 58% of NAV in private companies and another 12% in cash & equivalents.

-60%-50%-40%-30%-20%-10%

0%10%20%30%40%

Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10

Av erage

+1 std dev

-1 std dev

Type Of Industry ($mlns) Per Share % of TotalManufacturing 611 5.17 15%Healthcare 682 5.77 16%Aerospace 434 3.67 10%Customer Support Serv ices 340 2.87 8%Other Industries 301 2.54 7%

Financial Serv ices 175 1.48 4%Mid-cap Opportunities 211 1.78 5%Credit Securities 97 0.82 2%Real Estate 97 0.82 2%

2,948 24.92 70%Other 749 6.33 18%Cash And Near-Cash items 513 4.34 12%Total Assets 4,210 $35.59 100%

Net Asset Value

Source: Company reports and CIBC World Markets Inc

Expecting NAV Growth To Accelerate And NAV Discount To Narrow - January 17, 2011

67




Company Update


Pacific Rubiales Energy Corp. Strong Growth Continues

We recently initiated coverage of Pacific Rubiales Energy with a Sector Outperformer rating and now have a 12- to 18-month price target of C$43.50. In our view, PRE has a series of upcoming catalysts that should continue to drive the stock to new highs.

Since inception, management has focused on developing the 4.2 BBbls OOIP Rubiales field and will have increased gross production almost 12-fold to 170 MBbls/d by YE 2010. Additional discoveries on the offsetting Quifa block should provide another 30 MBbls/d of production by YE 2010.

We forecast 57 MBoe/d (after royalty) in 2010, growing to 92 MBoe/d in 2011 and 104 MBoe/d in 2012 based only on development of Rubiales and Quifa. We expect the company's 2011 exploration drilling at Quifa, CPE-6 and La Creciente to fuel future growth.

Our C$43.50 price target includes a base NAV estimate of C$23.60/FD share for the producing assets plus cash, liabilities and dilutive proceeds and C$20.02/FD share in risked upside (C$38.46/FD share unrisked) for prospects in Quifa, CPE-6 & Topoyaco that will be drilled in 2011.







Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target C$43.50 PRE-TSX (1/12/11) C$33.82 Key Indices: TSXOilGas

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range C$13.31-C$35.67 Shares Outstanding 266.5M Float 249.7M Shrs Avg. Daily Trading Vol. 1,880,903 Market Capitalization $9,151.6M Dividend/Div Yield C$0.38 / 1.1% Fiscal Year Ends December Net Asset Value $43.62 per Shr 2011 ROE (E) NM Net Debt $168.0M Preferred Nil Common Equity NM Convertible Available Yes Cash Flow Per Share Current 2010 $2.42E 2011 $4.29E 2012 $5.27E P/CF 2010 14.2x 2011 8.0x 2012 6.5x Company Description Pacific Rubiales Energy Corp. is a Canadian-based company and producer of heavy oil and natural gas with producing assets in Colombia and exploration assets in Peru. www.pacificrubiales.com

Strong Growth Continues - January 17, 2011

69

Pacific Rubiales Energy Corp. (PRE-TSX, PREC-BVC) Sector OutperformerCurrent Price: C$33.82Price Target: C$43.50 Analyst: Ian Macqueen, P.Geol. Ph: (403) 260-8675 E-mail: [email protected] Return: 29.7% Associate: Paul Nielsen, Ph: (403) 216-3403 E-mail: [email protected]

Financial Statistics And Current Valuation 2010E Net Asset Valuation - 2009Share Price ($) C$33.82 Total Risked Asset Value C$13,040Weighted Average Diluted Shares O/S 285 Total Risked NAVPS - 10% C$43.62Market Capitalization - $M C$9,624 P/NAVPS (Risked) 78%Net Debt - $mm C$240 Target P/NAVPS (Risked) 100%Enterprise Value - $M C$9,863.9 Total Unrisked Asset Value C$18,553Float - mm 250 Total Unrisked NAVPS - 10% C$62.06Average Trading Volume (50 Day) 1,880,903 P/NAVPS (Unrisked) 54%Annual Dividend / Yield C$0.38 / 1.1% Target P/NAVPS (UnRisked) 70%

Note: All company figures are in USD unless stated otherwiseCIBC Deck 2009 2010E 2011E 2012ENYMEX WTI (US$/bbl) $61.99 $79.51 $85.00 $85.00NYMEX Gas (US$/mcf) $3.94 $4.37 $4.50 $4.50FX (US$/C$) $0.88 $0.97 $0.97 $0.97

Operating Statistics 2009 2010E 2011E 2012EColombian Natural Gas Production 44 58 56 56Natural Gas (mmcf/d after royalties) 44 58 56 56Colombian Oil Production 28,026 47,525 82,950 94,222Oil (bbl/d after royalties) 28,026 47,525 82,950 94,222Production (mboe/d after royalties) 35.4 57.2 92.3 103.5Natural Gas % 21% 17% 10% 9%Production Per Share (boe/d per MM FD) 124 201 324 364Production Growth Per Share - % 57% 62% 61% 12%Production Per Share (boe/d per MM FD) - Debt Adjusted 121 196 316 355

Financial Statistics - US$mm (except per share values) 2009 2010E 2011E 2012EColombia EBITDA $247 $871 $1,675 $2,072Total EBITDA $247 $871 $1,675 $2,072Total Company Operating Cash Flow (US$mm) $196 $689 $1,268 $1,559CFPS (Diluted) $0.93 $2.42 $4.29 $5.27Operating Income ($154) $236 $639 $851Operating EPS (Diluted) ($0.72) $0.83 $2.16 $2.88Net Capex $350 $858 $1,120 $900Net Capex/Cash Flow - % 178% 124% 88% 58%Free Cash Flow ($154) ($169) $148 $659

Debt Analysis 2009 2010E 2011E 2012ENet Debt - $mm $236 $237 $189 ($370)Net Debt/Cash Flow 1.2x 0.3x 0.1x (0.2x)Net Debt/EV 0.0x 0.0x 0.0x (0.0x)

Valuation 2009 2010E 2011E 2012EEV / DACF 38.5x 13.6x 7.8x 6.1x Target EV / DACF 49.2x 17.4x 10.0x 7.9x P/CFPS 36.9x 14.2x 8.0x 6.5x Target P / CFPS 47.5x 18.2x 10.3x 8.4x


Strong Growth Continues - January 17, 2011

70




Company Update


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

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.


Source: Reuters All figures in US dollars, unless otherwise stated.



Brian Quast 1 (416) 956-3725 [email protected]

Robert Hales, CFA 1 (416) 594-7261 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Overweight 12-18 mo. Price Target $52.00 PAAS-NASDAQ (1/12/11) $37.69 Key Indices: Gold/Sil, TSX/SP - Canadian Gold

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $20.00-$42.33 Shares Outstanding 106.9M Float 106.9M Shrs Avg. Daily Trading Vol. 1,400,000 Market Capitalization $4,029.8M Dividend/Div Yield $0.10 / 0.3% Fiscal Year Ends December Book Value $13.66 per Shr 2011 ROE (E) NM LT Debt $0.0M Preferred Nil Common Equity $1,460.6M Convertible Available No Earnings Per Share Current 2010 $1.09E 2011 $2.69E 2012 $2.89E P/E 2010 34.6x 2011 14.0x 2012 13.0x Cash Flow Per Share 2010 $2.00E 2011 $3.94E 2012 $4.12E P/CF 2010 18.8x 2011 9.6x 2012 9.1x Company Description Pan American Silver Corp. is a primary silver producer offering investors considerable production growth and leverage to silver prices.

www.panamericansilver.com

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

72

Precious Metals

PAN AMERICAN SILVER Brian Quast, (416) 956-3725Stock Rating: Sector Outperformer [email protected] Weighting: Overweight Barry Cooper, (416) 956-678712-18 mo. Price Target: $52.00 [email protected] (01/12/11): $37.69 Robert Hales, (416) 594-7261Fiscal Year End December 31 [email protected]

COMPANY DESCRIPTION RESERVES AND RESOURCES(in thousands unless otherwise indicated)

Grade Silver Silver Eq.Tonnes Ag (g/t) (ounces) (ounces)

INVESTMENT THESIS Huaron Proven & Probable 10,842 184 64,230 128,000Measured & Indicated 1,340 158 6,817 18,482

Morococha Proven & Probable 6,786 174 37,976 82,371Measured & Indicated 2,500 184 14,765 30,468

La Colorada Proven & Probable 2,282 415 30,435 41,045NET ASSET VALUE Measured & Indicated 1,388 216 9,660 13,457(in US$ millions, except per share amounts; based on $20 silver) Quiruvilca Proven & Probable 770 159 3,926 11,027

Measured & Indicated 3,372 132 14,315 48,836Discount Rate: 5% Alamo Dorado Proven & Probable 10,146 95 30,895 39,484

Measured & Indicated 3,697 65 7,669 12,009Properties Ownership NAV NAV/sh Manantial Espejo Proven & Probable 7,341 153 36,132 77,551

Huaron 100% $196 $1.83 Measured & Indicated 2,969 102 9,717 17,284Quiruvilca 100% $44 $0.41 San Vicente Proven & Probable 2,254 392 28,388 33,678La Colorada 100% $368 $3.44 Measured & Indicated 1,617 167 8,678 12,164Morococha 92% $272 $2.55 Silver Stockpile Probable 189 318 1,935 1,935Alamo Dorado 100% $329 $3.08 Navidad Measured & Indicated 155,200 127 632,363 799,096Stockpiles 100% $13 $0.12 Pico Machay Measured & Indicated 10,600 0 0 21,168Manantial Espejo 100% $553 $5.17 Calcatreu Indicated 7,995 26 6,606 60,687San Vicente 95% $82 $0.76Loma de la Plata 100% $678 $6.34Other $50 $0.47

$2,585 $24.18

Cash $288 $2.70Debt ($21) ($0.19)Total $2,853 $26.68

PRICE ASSUMPTIONS2009A 2010E 2011E 2012E

Silver US$/oz $14.70 $20.00 $28.00 $30.00Gold US$/oz $974 $1,225 $1,600 $1,700Zinc US$/lb $0.76 $0.94 $0.90 $0.90Lead US$/lb $0.78 $0.75 $0.75 $0.75Copper US$/lb $2.35 $3.37 $3.75 $3.25 PRODUCTION AND COSTS

INCOME STATEMENT Production 2009A 2010E 2011E 2012E 2013E(in US$ millions, except per share amounts) Silver 'mln oz 23 25 24 25 31

Silver Eq. 'mln oz 38 37 36 35 432009A 2010E 2011E 2012E Gold '000 oz 101 91 104 90 76

Zinc 'mln lbs 98 99 103 105 111Revenues $455 $645 $978 $1,014 Lead 'mln lbs 31 31 33 34 50

Copper 'mln lbs 14 11 16 17 19Expenses

Operating Expenditures $246 $316 $388 $395 Total Cash CostsS,G&A $13 $15 $18 $18 Per Silver US$/oz $5.35 $5.10 $2.01 $2.96 $4.73D,D&A $78 $95 $83 $78 Per Silver Eq. US$/oz $6.41 $8.55 $10.65 $11.20 $9.87Exploration $10 $34 $40 $40Other Expenses $12 -$5 $0 $0

Total Expenses $359 $456 $529 $531

Income Before Taxes $91 $190 $449 $483Income/Mining Tax $28 $76 $157 $169Non-controlling Interest $1 $3 $4 $5

Net Income $70 $114 $292 $314

EPS $0.80 $1.09 $2.69 $2.89CFPS $1.64 $2.00 $3.94 $4.12

Shares Outstanding 87 107 107 107

Pan American Silver Corp. is a primary silver producer with operating assets in Mexico, Argentina, Peru, and Bolivia, and provides investors leverage to silver prices.

Pan American is our top pick in our silver coverage universe with a proven record of operational expertise and a strong balance sheet. The company is also well positioned to make future acquisitions.

0

10

20

30

40

50

2009A 2010E 2011E 2012E 2013E

('mln

oun

ces)

$0.00$2.00$4.00$6.00$8.00$10.00$12.00

(US$

/oz)

Silver Production Silver Eq. ProductionTotal Cash Cost Per Silver Oz. Total Cash Cost Per Silver Eq. Oz.

Fortuna Silver

Silver Standard

Gammon Gold

HeclaSilvercorp

Coeur d'Alene

Pan American First MajesticEndeavour Silver

Silver Wheaton

2x4x6x8x

10x12x14x16x18x20x

0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x

P/NAV ($20/oz Silver, 5% Discount Rate)

P/20

12E

CF ($

30/o

z Silv

er)

Source: Company reports and CIBC World Markets Inc

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

73




Company Update


Penn West Petroleum Ltd. Tight Oil Resource Plays Underpin Impressive Asset Base

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%).








Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $32.00 PWT-TSX (1/12/11) $25.14 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 Current 2009 $3.62A 2010 $2.66E 2011 $3.24E P/CF 2009 6.9x 2010 9.5x 2011 7.8x Cash Distribution Per Unit 2009 $2.04A 2010 $1.56E 2011 $1.08E Cash-on-Cash Yield 2009 8.1% 2010 6.2% 2011 4.3% Company Description Penn West Exploration converted from a trust to a dividend-paying corporation on January 3, 2011.

www.pennwest.com

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

75

Penn West Exploration (PWT - TSX) Current Price: C$25.14 Shares O/S(1): 454.7MM Jeremy Kaliel, MBA (403-260-8657) [email protected] 12 To 18 Month Price Target: C$32.00 Market Cap.: $11,431MM Diana Chaw (403-216-8518) [email protected] Dividend (NTM) / Freq. / Yield: $1.08 / mthly / 4.3% Average Trading Vol (50 day): 930,000 Jeff Shen (403-221-5047) [email protected]






% Gas 41% FD&A - 2P, incl. FDC $9.51Cash Recycle Ratio3 0.5xReserve Engineers: Gilbert Laustsen Jung Associates Ltd.

DEBT & OUTFLOWS VS. INFLOWS VALUATION SUMMARY5


Cash Flow from Operations $1,173 $1,492 Gross Revenue (net trans) $49.74 $54.25Capital Spending6 ($1,000) ($1,100) Hedging Gains (Losses) ($0.37) ($0.19)Dividends ($688) ($498) Royalties ($9.12) ($10.18)

DRIP $121 $100 Operating Costs ($15.52) ($15.50)Surplus (Deficit) ($394) ($6) Operating Netback $24.74 $28.37

Working Capital Deficit $195 $178 G&A ($2.27) ($2.25)Bank Debt $887 $913 Interest ($2.87) ($2.49) Key Valuation Metrics vs. Coverage Group (CIBC Estimates)Senior Notes/Other Debt $1,907 $1,904 Cap Tax/Other $0.00 $0.00 EV/ EV/2PNet Debt at Year-end $2,989 $2,995 Cash Flow Netback $19.60 $23.63 Share Expected 2011E 2011E 2011E P/Core P/Risked Production ReservesDebt / CF (Y/E Debt, Year CF) 2.5x 2.0x Price Return Yield P/CF EV/DACF NAV NAV ($/Boe/d) ($/Boe)Total Credit Facility (Current) $2,250 Group avg Operating Netback $30.40 $32.22 Penn West $25.14 32% 4.3% 7.8x 8.8x 152% 77% $82,448 $21.42


MANAGEMENT (Ownership: 0.2%) NOTESName Position Name PositionWilliam Andrew CEO Mark Fitzgerald SVP, ProductionMurray Nunns President & COO Hilary Foulkes SVP, Business Dev.Todd Takeyasu EVP & CFO Keith Luft General CounselDavid Middleton EVP, Eng. & Cop. Dev. Bob Shepherd SVP, Expl. & Dev.Thane Jensen SVP, Operations Eng.

Sector Outperformer

173,000E40%


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.


0100200300400500600700800

2005

A

2006

A

2007

A

2008

A

2009

A

(Mmb

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

(% ch

ange

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2P Reserves - MMboe (PWT)RPS Growth (PWT)RPS Growth (Avg)


025,00050,00075,000

100,000125,000150,000175,000200,000225,000

2007

A

2008

A

2009

A

2010

E

2011

E

(boe

/d)

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

(% ch

ange

- YO

Y)

Production (PWT)PPS Growth (PWT)PPS Growth (Avg)


PWT Risked NAV (C$/Share)

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90



US$50/bblC$4.00/mcf

PriceTarget

Risked NAV

Current Price


Price to Risked NAV

71%76%

83% 87% 88% 93% 94% 97% 101%104%105%108%108%108%112%

77%

94%

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EV/DACF (2011E)

6.4x 6.5x 7.0x 8.0x 8.1x 8.2x 8.9x 9.1x 9.3x 9.5x 10.1x10.7x 11.1x 11.4x12.2x

8.8x 9.1x

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D/CF (PWT)D/CF (Group)Credit Line Drawn (PWT)Credit Line Drawn (Group)

25%

50%

75%

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125%

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Grou

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2005 2006 2007 2008 2009 2010E 2011E

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2005 2006 2007 2008 2009 2010E

Total

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

76




Company Update


Petrominerales Ltd. Expecting Follow-up Success In A Big Exploration Year

We recently initiated coverage of Petrominerales with a Sector Outperformer rating and now have a 12- to 18-month price target of C$42.00. PMG has a 45+ well exploration program in 2011 that is focused in some very prospective areas, which could drive the stock to new highs.

After shooting extensive high-quality 3D seismic data on the surrounding lands, management has identified another 55 exploration prospects for future drilling. Sixteen of the best prospects will be drilled in 2011 (roughly 38% of the company's 2011 exploration program).

Newer areas of exploration for 2011 include the deep foothills (two 25MMBbls+ prospects) and a burgeoning heavy oil trend (50 MMBbls+ prospects). Both of these areas afford the company an opportunity to make a material discovery that could reshape its future.

Our base NAV estimate for PMG, including producing assets plus cash, liabilities and dilutive proceeds, is C$23.32/FD share. We have also included C$18.70/FD share in risked upside (C$54.67/FD share unrisked), which could be realized from 2011 exploration drilling, bringing our PT to C$42.00.







Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target C$42.00 PMG-TSX (1/12/11) C$37.12 Key Indices: TSXOilGas

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range C$19.85-C$37.57 Shares Outstanding 102.9M Float 100.0M Shrs Avg. Daily Trading Vol. 601,070 Market Capitalization $3,877.1M Dividend/Div Yield C$0.50 / 1.3% Fiscal Year Ends December Net Asset Value $42.02 per Shr 2011 ROE (E) NM Net Cash $517.43M Preferred Nil Common Equity NM Convertible Available Yes Cash Flow Per Share Current 2010 $5.39E 2011 $5.06E 2012 $3.56E P/CF 2010 7.0x 2011 7.4x 2012 10.6x Company Description Petrominerales Ltd. 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. www.petrominerales.com

Expecting Follow-up Success In A Big Exploration Year - January 17, 2011

78

Petrominerales Ltd. (PMG-TSX) Sector OutperformerCurrent Price: C$37.12Price Target: C$42.00 Analyst: Ian Macqueen, P.Geol. Ph: (403) 260-8675 E-mail: [email protected] Return: 14.5% Associate: Paul Nielsen, Ph: (403) 216-3403 E-mail: [email protected]

Financial Statistics And Current Valuation 2010E Net Asset Valuation - 2009Share Price ($) C$37.12 Total Risked Asset Value C$4,668Weighted Average Diluted Shares O/S 104 Total Risked NAVPS - 10% C$42.02Market Capitalization - $M C$3,877 P/NAVPS (Risked) 88%Net Debt - $mm (C$577) Target P/NAVPS (Risked) 100%Enterprise Value - $M C$3,301 Total Unrisked Asset Value C$8,663Float - mm 100 Total Unrisked NAVPS - 10% C$77.98Average Trading Volume (50 Day) 601,070 P/NAVPS (Unrisked) 48%Annual Dividend / Yield C$0.50 / 1.3% Target P/NAVPS (UnRisked) 54%

CIBC Deck 2009 2010E 2011E 2012ENYMEX WTI (US$/bbl) $61.99 $79.51 $85.00 $85.00NYMEX Gas (US$/mcf) $3.94 $4.37 $4.50 $4.50FX (US$/C$) $0.88 $0.97 $0.97 $0.97

Operating Statistics 2009 2010E 2011E 2012EColombian Natural Gas Production - - - -Natural Gas (mmcf/d before royalties) - - - -Colombian Oil Production 22,490 38,969 39,199 26,273Oil & Liquids (bbl/d before royalties) 22,490 38,969 39,199 26,273Production (mboe/d before royalties) 22.5 39.0 39.2 26.3Natural Gas % 0% 0% 0% 0%Production Per Share (boe/d per MM FD) 215 373 375 252Production Growth Per Share - % nmf 73% 1% (33%)Production Per Share (boe/d per MM FD) - Debt Adjusted 253 438 441 295

Financial Statistics - $mm (except per share values) 2009 2010E 2011E 2012EColombia - EBITDA $297 $704 $720 $526Total EBITDA $297 $704 $720 $526Total Company Operating Cash Flow (US$mm) $284 $563 $532 $374CFPS (Diluted) $2.84 $5.39 $5.06 $3.56Operating Income $100 $240 $236 $173Operating EPS (Diluted) $1.00 $2.30 $2.25 $1.64Capital Expenditures $298 $482 $630 $550Net Capex $298 $511 $630 $550Net Capex/Cash Flow - % 105% 91% 118% 147%Free Cash Flow ($15) $52 ($98) ($176)

Debt Analysis 2009 2010E 2011E 2012ENet Debt - $mm $63 ($570) ($421) ($193)Net Debt/Cash Flow 0.2x (1.0x) (0.8x) (0.5x)Net Debt/EV 0.0x (0.2x) (0.1x) (0.1x)

Valuation 2009 2010E 2011E 2012EEV / DACF 13.1x 5.8x 6.4x 9.5x Target EV / DACF 14.8x 6.7x 7.3x 10.8x P/CFPS 13.3x 7.0x 7.4x 10.6x Target P / CFPS 15.0x 7.9x 8.4x 12.0x


Expecting Follow-up Success In A Big Exploration Year - January 17, 2011

79




Company Update

January 17, 2011 Metals & Minerals

Quadra FNX Mining Ltd. Strong Copper Production Growth To Overcome Weak 2010 Operating Performance

Quadra FNX is an operationally diverse large-cap copper miner with an attractive growth pipeline, low political risk profile, and strong balance sheet. The company also holds the highest earnings and NAV leverage to copper, our favored commodity exposure, in our coverage universe.

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.

We expect QUX's copper production to increase ~40% Y/Y, due mainly to the addition of Morrison, with copper output set to more than double by 2015 as Sierra Gorda enters production. The Victoria project should continue to advance, which has future potential to add significant value.

QUX is trading at about 0.7x P/NAV, 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, albeit with above-average, near-term operational risk.





Alec Kodatsky 1 (416) 594-7284 [email protected]

Terry K.H. Tsui, CFA 1 (416) 956-3287 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target C$25.50 QUX-TSX (1/12/11) C$16.97 Key Indices: None

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range C$8.98-C$18.57 Shares Outstanding 188.9M Float 186.8M Shrs Avg. Daily Trading Vol. 1,330,024 Market Capitalization $3,240.4M Dividend/Div Yield Nil / Nil Fiscal Year Ends December Book Value $11.27 per Shr 2011 ROE (E) NM LT Debt $0.0M Preferred Nil Common Equity $2,128.3M Convertible Available No Earnings Per Share Current 2009 $0.71A 2010 $1.31E 2011 $3.21E P/E 2009 24.2x 2010 13.1x 2011 5.3x Cash Flow Per Share 2009 $1.25A 2010 $2.05E 2011 $4.05E P/CF 2009 13.7x 2010 8.4x 2011 4.2x Company Description Quadra Mining Ltd. has quickly emerged as an Americas-focused developer and producer of copper. Management has delivered on promised production growth. www.quadramining.com

Strong Copper Production Growth To Overcome Weak 2010 Operating Performance - January 17, 2011

81

Quadra FNX Mining Ltd. (QUX) Sector OutperformerCurrent Price: $16.97 Alec Kodatsky (416-594-7284) [email protected] Months Target Price: C$25.50 Terry Tsui (416-956-3287) [email protected]

(All figures in US$, unless otherwise stated) Key Data52-week trading range ($) Low: 8.98 High: 18.57Average daily trading volume (000) 1,500TSX index weight 0.09%Shares outstanding (mm) Basic 188.8 Fully diluted 141.6 Public float 188.8Market capitalization - basic ($mm) 3,205

Q3 2010ACash ($mm) 323Working capital ($mm) 545Total debt ($mm) 0Common equity ($mm) 2,128Net debt/common equity (x) n/a

Year-end Dec. 31 2009A 2010E 2011E 2012E

EPS ($) 0.71 1.31 3.21 2.94CFPS ($) 1.25 2.05 4.05 3.66Book value ($) 1005 2222 3090 4085NPV per share ($) 27.73P/E (x) 23.9 13.0 5.3 5.8

CIBC Forecast 20 2009A 2010E 2011E 2012E E P/CF (x) 13.6 8.3 4.2 4.6P/book value (x) 1.7 1.4 1.0 0.8

Ni price (US$/lb) ## 6.62 9.90 10.50 9.25 P/NPV (x) 0.61Cu price (US$/lb) ## 2.33 3.42 4.50 4.00 EV/EBITDA (x) 6.8 5.0 2.1 1.8C$ exchange rate (US$) ## 0.88 0.97 0.99 0.93 EV/EBIT (x) 13.4 7.0 2.4 2.0

EV/OpFCF (x) (13.6) 55.8 4.4 5.0ROE nm 10% 22% 15%

Operating Metrics 20 2009A 2010E 2011E 2012E 2E ROCE nm 11% 37% 32%Dividend/share ($) 0.00 0.00 0.00 0.00

Ni production (000 tonnes) ## 0.0 2.7 4.7 6.7 ##Cu production (000 tonnes) ## 66.7 104.8 155.2 169.2 ## Sensitivity to ±10% Change in Forecast Price Cu NiCash cost (US$/lb Cu) ## 1.98 1.62 1.41 1.54 ## EPS ($) 2011E 0.31 0.04

NAVPS ($) 2.82 0.38

Income Statement 20 2009A 2010E 2011E 2012E Key Ratios 2009A 2010E 2011E 2012E Reserves & Resources Tonnes (mm) GradeRevenue ## 460 942 1,808 1,801 Growth At Dec. 31, 2009 Cu (%) Ni (%) Mo (%)EBITDA ## 174 378 1,016 965 EBITDA YoY 6% 117% 169% -5% Robinson 652.9 0.54%EBIT ## 89 267 911 840 EBIT YoY 72% 202% 241% -8% Carlota 111.5 0.39%EBT ## 80 202 646 591 EBT YoY 108% 151% 219% -8% Franke 65.7 0.71%Reported income ## 80 205 646 591 OpFCF YoY -16% 122% 330% -29% Sierra Gorda 1,129.2 0.42% 0.02%

3-Yr CAGR EPS 302% 228% 6% 3% McCreedy 4.2 0.84% 0.92%EPS ($) ## 0.71 1.31 3.21 2.94 3-Yr CAGR CFPS 97% 709% 109% 133% Podolsky 8.5 1.03% 0.67%

3-Yr CAGR EBITDA 276% 185% 27% 46% Levack 6.0 1.08% 2.09%Cash Flow 20 2009A 2010E 2011E 2012E 3-Yr CAGR EBIT 341% 89% 3% 34% Levack Footwall 0.8 8.09% 1.26%Earnings after tax ## 80 205 646 591 Operating Summary 2009A 2010E 2011E 2012E + Depreciation & amortization ## 32 88 101 121 Profitability Robinson 100% + Deferred tax ## (16) 22 57 12 EBITDA margin 38% 40% 56% 54% Copper Production (mlbs) 122.5 116.7 142.4 142.4 + Other ## 46 13 12 12 EBIT margin 19% 28% 50% 47% Cash cost (US$/lb. Cu) $0.96 $1.23 $1.34 $1.19Funds from operations ## 142 328 816 736 EBT margin 18% 21% 36% 33% Carlota 100%Operating CFPS (ex minority) ## 1.25 2.05 4.05 3.66 Net margin 18% 22% 36% 33% Copper Production (mlbs) 28.0 30.9 45.1 55.8 - Maintenance capex ## 10 10 29 42 Cash cost (US$/lb. Cu) $2.57 $1.86 $1.80 $1.48 - Capital expenditures ## 80 205 301 351 Coverage Franke 100% - Debt repayment 0 0 0 0 0 Dividend cover (x) - - - - Copper Production (mlbs) 13.5 40.7 56.9 60.9Free cash flow ## 51 113 486 344 Interest cover (x) - - - - Cash cost (US$/lb. Cu) $2.43 $2.27 $1.59 $1.54Free CFPS ## 0.27 0.60 2.57 1.82 McCreedy 100%Operating free cash flow ## 51 113 486 344 NAV Valuation (1) $mm $/Shr. Copper Production (mlbs) 7.4 5.2 10.5 10.9

Cash cost (US$/lb. Cu) $4.08 $0.11 $0.12 $0.43Balance Sheet 20 2009A 2010E 2011E 2012E Mining assets basic Podolsky 100%Cash ## 133 346 832 1,268 McCreedy (100%) 67 0.36 Copper Production (mlbs) 25.5 24.5 32.9 35.0Other current assets ## 247 425 425 425 Podolsky (100%) 210 1.11 Cash cost (US$/lb. Cu) $2.17 $1.23 $0.32 $0.99Other assets ## 86 221 221 221 Levack (100%) 117 0.62 Levack 100%Capital assets ## 781 1,980 2,419 2,990 Morrison (100%) 1,131 5.99 Copper Production (mlbs) 2.3 0.0 0.0 2.9Total assets ## 1,247 2,972 3,897 4,904 Robinson (100%) 581 3.07 Cash cost (US$/lb. Cu) ($3.08) $0.00 ($4.73) ($3.39)

Carlota (100%) 345 1.83 Morrison 100%Current liabilities ## 163 161 161 161 Franke (100%) 598 3.16 Copper Production (mlbs) 0.0 13.1 54.2 65.1Debt (LT & current) 0 0 43 43 43 Sierra Gorda (50%) 903 4.78 Cash cost (US$/lb. Cu) $0.00 $0.05 ($0.02) ($0.02)Other liabilities ## 79 546 603 615 Total NPV of mining assets 3,952 20.93 Preferred equity 0 0 0 0 0 "Total" Cost (US$/lb. Cu) 2009A 2010E 2011E 2012ECommon equity ## 1,005 2,222 3,090 4,085 Other assets/exploration Cash operating cost 1.98 1.62 1.41 1.54Total liabilities and equity ## 1,247 2,972 3,897 4,904 Exploration/other assets 200 1.06 Royalties 0.12 0.14 0.12 0.11

Total other assets 200 1.06 Total cash cost 2.10 1.76 1.53 1.65Net debt (cash) ## (133) (303) (789) (1,225) Non-cash cost (DDA) 0.19 0.26 0.24 0.30

Corporate (221) (1.17) Total production cost 2.29 2.02 1.77 1.95Enterprise Value 20 2009A 2010E 2011E 2012E Equity investments 270 1.43 G & A 0.09 0.15 0.12 0.11Market capitalization ## 1,381 3,205 3,205 3,205 Working capital 567 3.00 Interest cost 0.00 0.00 0.00 0.00Net debt - average ## (133) (303) (789) (1,225) Long-term debt - - Total cost 2.38 2.17 1.88 2.06Preferred equity - average 0 0 0 0 0 Net asset value 4,768 25.25 MANAGEMENTMinority interest / other 0 0 0 0 0 C$ 25.50 Terry MacGibbon, ChairmanOther non-core 0 0 0 0 0 1. 8% real discount rate on assets, except for Paul Blythe, CEOEnterprise value ## 1,247 2,902 2,416 1,980 Sierra Gorda (at 10%); CIBC price forecasts and after tax. Web Site www.quadramining.com

ProfileQuadra FNX is a growing copper producer with a significant nickel and precious metals production profile. Thecompany's assets are located in politically stable, mining-friendly jurisdictions in North and South America. Investment SummaryQuadra FNX has a strong metals production growth profile, a robust balance sheet and the potential to add low-riskincremental growth at below-average capital costs. In our view, the market is not fully pricing in the start-up of theMorrison project, which we expect to emerge as the company's highest operating margin asset as it ramps up to fullproduction 2011. In addition, the company possesses advanced development project Sierra Gorda, a copper-molybdenum project in Chile, which has the potential to double its current copper production once in operation in 2014.

Outlook- The start-up of Morrison and the ramp-up at Carlota and Franke should drive the company’s near-term metalsproduction growth. - Development milestones of the Sierra Gorda project prefeasibility study, as well as water rights acquisitions andpermitting, will likely represent the medium-term catalysts.- With a strong financial position, we expect the company to continue to focus on exploration that can yield newdiscoveries while maintaining its current strong production growth profile.

0255075

100125150175200

2009

A

2010

E

2011

E

2012

E-$1.00-$0.50$0.00$0.50$1.00$1.50$2.00$2.50

Cu production (000 tonnes) Cash cost (US$/lb Cu)


Strong Copper Production Growth To Overcome Weak 2010 Operating Performance - January 17, 2011

82




Company Update

January 17, 2011 Telecommunications & Cable Services

Rogers Communications Inc. Valuation Too Attractive, Even With Wireless Concerns

Rogers is our top pick for 2011 in the media, cable & telecom space. We continue to believe that wireless offers strong growth ahead despite competitive pressure. Shareholder gains will come from solid free cash flow generation, as there remains little need for capital in the medium term.

While we expect wireless competitive worries and pricing pressure to persist, at least in the short term, we remain bullish on the long-term fundamentals of wireless, and expect to see continued growth in data in future quarters, ensuring ARPU remains flat to slightly up by year-end.

While Rogers' cable segment continues to show signs of maturity, a focus on cost cutting should result in EBITDA growth. Rogers is well positioned to take on any TV competition, either by way of traditional incumbents through IPTV offerings or over-the-top Internet offerings.

Given our confidence in Rogers' execution, with a history of strong shareholder-friendly policies, we continue to believe Rogers represents good value for investors, with current valuations well below historical levels. We rate Rogers Sector Outperformer with a $44 price target.





Robert Bek, CFA 1 (416) 594-7454 [email protected]

Tony Rizzi 1 (416) 594-7299 [email protected]

Michael Lee, CFA 1 (416) 594-7907 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $44.00 RCI.B-TSX (1/12/11) $35.15 Key Indices: S&P/TSX 60

3-5-Yr. EPS Gr. Rate (E) 16.1% 52-week Range $30.64-$41.64 Shares Outstanding 574.0M Float 484.5M Shrs Avg. Daily Trading Vol. 1,101,546 Market Capitalization $20,176.1M Dividend/Div Yield $1.28 / 3.7% Fiscal Year Ends December Book Value $7.19 per Shr 2011 ROE (E) 38.0% Net Debt $9,524.0M Preferred Nil Common Equity $4,125.0M Convertible Available Yes Earnings Per Share Current 2009 $2.48A 2010 $3.04E 2011 $3.10E P/E 2009 14.2x 2010 11.6x 2011 11.3x EBITDA ($ mlns.) 2009A $4,415.0 2010E $4,715.2 2011E $4,850.7 EV/EBITDA 2009A 6.7x 2010E 6.3x 2011E 6.1x Company Description Rogers Communications Inc. owns the largest wireless operator and cable operator in Canada. The company also has an extensive portfolio of media assets, and owns the Toronto Blue Jays of MLB. www.rogers.ca

Valuation Too Attractive, Even With Wireless Concerns - January 17, 2011

84

Rogers Communications Inc. (RCI.B - TSX) Sector Outperformer Current Price : C$35.15 Robert Bek, CFA (416-594-7454) [email protected] 12- To 18- Month Price Target: C$44.00 Michael Lee, CFA (416-594-7907) [email protected]

Tony Rizzi (416-594-7299) Tony [email protected] figures in millions except per share data

EV / EBITDA Multiples 2008A 2009A 2010E 2011E Company Profile

Rogers Communications - 6.7x 6.3x 6.1xShaw Communications - 9.0x 7.9x 6.8xComcast - 6.6x 6.2x 5.9xTime Warner Cable - 6.7x 6.4x 6.1x

P / E Multiples 2008A 2009A 2010E 2011E Investment Thesis

Rogers Communications - 14.2x 11.6x 11.2xShaw Communications - 16.3x 16.4x 12.9xComcast - 17.9x 18.0x 15.5xTime Warner Cable - 19.1x 18.2x 14.7x

Key Financial Metrics 2008A 2009A 2010E 2011E

Free Cash Flow Yield 7.0% 8.6% 9.8% 10.6%Payout Ratio 38.3% 38.9% 35.8% 35.8%Consolidated Capex Intensity 17.8% 15.8% 14.3% 13.9%Net Debt / EBITDA 2.1x 2.1x 2.0x 1.7xTax Rate 29.7% 25.4% 27.8% 30.0%

Income Statement 2008A 2009A 2010E 2011E Chart 1: Revenues & EBITDA By Segment (2010E)

Revenue 11,335.0 11,731.0 12,250.2 12,756.4OpEx 9,035.0 9,046.0 9,160.0 9,605.6EBITDA 4,060.0 4,415.0 4,715.2 4,850.7Depreciation & Amortization 1,760.0 1,730.0 1,625.0 1,700.0EBIT 2,300.0 2,685.0 3,090.2 3,150.7Interest Expense 575.0 647.0 671.6 655.0EBT 1,426.0 1,980.0 2,247.6 2,495.8Tax Expense (Recovery) 424.0 502.0 624.6 748.7

Net Income 1,002.0 1,478.0 1,623.0 1,747.0Adj. FD EPS 1.98 2.48 3.04 3.10

Free Cash Flow 2008A 2009A 2010E 2011E Key Operating Statistics (Last Reported Qtr.)

EBITDA 4,060.0 4,415.0 4,715.2 4,850.7Less:

Capex 2,021.0 1,855.0 1,756.0 1,786.5Cash Taxes 3.0 104.0 228.8 251.7Cash Interest 575.0 647.0 671.6 655.0

Operating Free Cash Flow (FCF) 1,461.0 1,809.0 2,058.8 2,157.6Operating FCF Per Share 2.29 2.91 3.56 3.73

While there remains concern over the effects of industry pricing pressure on wireless ARPU, we believe the prospects of attracting higher value subs will continue to drive strong data adoption capable of moderating the effect of voice erosion, leading to improving ARPU trends in future quarters.

Given the heightened focus on cost efficiencies and margin expansion, we expect both free cash flow and dividends to grow at a healthy clip, and with the implementation of a sizeable share buyback program, we believe Rogers will continue to deliver strong value to its shareholders.

With current concerns over competition and AWS entrant risks overblown, RCI shares are trading at a material discount to our NAV, providing an attractive entry point for investors looking to benefit from RCI's strong growth potential for both wireless and cable assets.

Rogers is a diversified Canadian communications company, engaged in wireless voice and data services, as well as a provider of cable television services, internet broadband and telephony products. Rogers also has a broad portfolio of media assets (radio, TV and publishing) and owns the Toronto Blue Jays MLB franchise.

55.7%67.0%

11.8%

32.5%29.5%

3.5%

0%

25%

50%

75%

100%

Revenues EBITDA

Wireless Cable Media

Q3/09 Q3/10 y/y GrowthWireless ('000):

Total Subs 8,366.0 8,881.0 6.2%Postpaid Net Adds 167.0 125.0 -25.1%Postpaid ARPU $76.79 $74.98 -2.4%Postpaid Churn 1.06% 1.21%Data % of Network Revenues 22.6% 28.0%

Cable ('000):Basic Subs 2,292.0 2,309.0 0.7%Digital Subs 1,625.0 1,719.0 5.8%Internet Subs 1,597.0 1,673.0 4.8%Telephony Subs 909.0 995.0 9.5%Total RGUs 6,566.0 6,779.0 3.2%

Source: Thomson, Company reports and CIBC World Markets Inc.

Valuation Too Attractive, Even With Wireless Concerns - January 17, 2011

85




Company Update


Semafo Inc. Operational Consistency Combined With Growth Upside

Semafo has been a model of operational consistency, meeting production/cost expectations the past three years. It has also delivered on expansion plans at its Mana plant, increasing throughput to 6,000 tpd (bedrock), with Phase III completed ahead of schedule and under budget.

With growth upside at Mana and torque to higher gold prices at Samira Hill and Kiniero, Semafo benefits from a complementary portfolio of assets. The company has one of the highest leverages to gold, with a 10% increase in gold price generating an approximately 23% increase in CFPS.

Operating in French West Africa, we believe management's French-Canadian background will remain an advantage for the company. Management will continue to focus on creating additional value with the development of the Mana underground. A feasibility study is scheduled for release Q1/11.

In 2010, exploration activities at Mana yielded several new discoveries such as Wona SW, Kona, Fofina and Fobiri. 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.





Cosmos Chiu, CFA 1 (416) 594-7106 [email protected]

Kevin Chiew 1 (416) 594-7457 [email protected]

Barry Cooper 1 (416) 956-6787 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Overweight 12-18 mo. Price Target C$18.50 SMF-TSX (1/12/11) C$11.23 Key Indices: None

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range C$4.11-C$14.44 Shares Outstanding 271.6M Float 269.5M Shrs Avg. Daily Trading Vol. 2,300,000 Market Capitalization $3,083.8M Dividend/Div Yield Nil / Nil Fiscal Year Ends December Book Value $1.71 per Shr 2010 ROE (E) NM LT Debt $19.3M Preferred Nil Common Equity $465.6M Convertible Available No Earnings Per Share Current 2010 $0.42E 2011 $0.80E 2012 $0.92E P/E 2010 27.0x 2011 14.2x 2012 12.3x Cash Flow Per Share 2010 $0.58E 2011 $0.97E 2012 $1.11E P/CF 2010 19.6x 2011 11.7x 2012 10.2x Company Description Semafo Inc. is a Canadian-based mining company with gold production and exploration activities in West Africa. Semafo currently operates three gold mines in Burkina Faso, Niger and Guinea. www.semafo.com

Operational Consistency Combined With Growth Upside - January 17, 2011

87

Precious Metals

SEMAFO INC. Cosmos Chiu, (416) 594-7106Stock Rating: Sector Outperformer [email protected] Weighting: Overweight Barry Cooper, (416) 956-678712-18 mo. Price Target: C$18.50 barry [email protected] (1/12/11): C$11.23 Kevin Chiew, (416) 594-7457Fiscal Year End December 31 [email protected]

COMPANY DESCRIPTION RESERVES & RESOURCES Tonnes Grade (g/t) Ounces(in thousands unless otherwise indicated) Au Au

Mana (Burkina Faso)Proven & Probable 18,437 2.80 1,665

INVESTMENT THESIS Measured & Indicated 11,485 1.86 687Inferred 12,745 2.20 909

Samira Hill (Niger)Proven & Probable 8,569 1.92 530Measured & Indicated 33,201 1.20 1,276Inferred 18,377 1.01 596

Kiniero (Guinea)PRICE ASSUMPTIONS 2009A 2010E 2011E 2012E Proven & Probable 1,592 3.65 187

Measured & Indicated 9,689 2.06 643Gold US$/oz $974 $1,225 $1,600 $1,700 Inferred 1,770 2.80 159Exchange Rate US/CAD $0.88 $0.95 $0.95 $0.95

INCOME STATEMENT 2009A 2010E 2011E 2012E(in US$ millions, except per share and indicated amounts)

Production (000s ounces) 242 261 280 302Cash Operating Costs (US$/oz) $463 $462 $466 $454Cash Costs (US$/oz) $510 $508 $526 $517

Revenues $241 $316 $449 $514

ExpensesOperating Expenses $124 $132 $147 $157D,D&A, Reclamation $41 $40 $48 $52S,G&A $14 $13 $13 $13Other Expenses $7 $7 $5 $5

Total Expenses $187 $192 $214 $226

Income Before Tax $54 $124 $235 $288Income Taxes $10 $11 $19 $38Net Income $44 $113 $216 $249

PRODUCTION AND COSTS 2009A 2010E 2011E 2012E 2013EEPS $0.18 $0.42 $0.80 $0.92CFPS $0.38 $0.58 $0.97 $1.11 Production

Mana '000 oz 154 178 190 200 245Shares Outstanding 242 272 272 272 Samira Hill '000 oz 57 53 56 62 62

Kiniero '000 oz 32 30 35 40 40NET ASSET VALUE Discount Ownership NAV NAV/sh Total Cash Costs(in US$ millions, except per share amounts; based on $1,200 gold) Mana US$/oz $398 $399 $437 $442 $482

Samira Hill US$/oz $724 $772 $761 $680 $606Mining Assets Kiniero US$/oz $642 $690 $629 $593 $568Mana - OP 5% 90% $565 $2.08Mana - UG 5% 90% $245 $0.90Samira Hill 5% 80% $156 $0.57Kiniero 5% 85% $85 $0.31Exploration Potential $137 $0.50Subtotal $1,188 $4.38

Balance SheetCash $193 $0.71LT Debt $19 $0.07Reclamation $0 $0.00Subtotal $174 $0.64

Net Asset Value $1,362 $5.02

Semafo Inc. is a Canadian-based mining company with gold production and exploration activ ities in West Africa. Currently Semafo operates three gold mines in Burkina Faso, Niger and Guinea.

Semafo has successfully commissioned three mines in West Africa. With 100% of its revenue generated from gold and 100% of its production unhedged, Semafo has one of the highest leverages to gold for both its cash flow and NAV. We believe Semafo is in a position to grow through acquisition in a West African region that remains highly fragmented, in addition to its expansion of Mana.

050

100150200250300350400

2009

A

2010

E

2011

E

2012

E

2013

E

Gold

Out

put (

000s

oz)

$400

$450

$500

$550Ca

sh C

osts

($/o

z)

Mana - OP Mana - UG Samira Hill Kiniero Total Cash Costs

ANV

ARZ

NGDSMF

AEM

ABX CG

EGO

GG NEM

AGI

GLW

NXG

CG (5%)

IAGKGC

FNV

AUY

RGLD

GAMMFL

GSS

CGA

MLL

0x

3x

5x

8x

10x

13x

15x

18x

0.5x 0.8x 1.0x 1.3x 1.5x 1.8x 2.0x 2.3x 2.5x 2.8x

Cash Adjusted NAV Multiples

CF M

ultip

les

Cash Adjusted NAV multiples calculated using gold price of $US1200 per ounce and 5% discount rate except for CG that is discounted at 12% due to additional risk

Cash flow multiples calculated at $US1700 gold price for 2012 estimates

Source: Thomson, Company reports and CIBC World Markets Inc.

Operational Consistency Combined With Growth Upside - January 17, 2011

88

Source: CIBC Trendspotting, Bloomberg.



Company Update

January 17, 2011 Oil & Gas - Large Cap

Suncor Energy Inc. Suncor Is Still King Of The Oil Sands

We consider Suncor Energy to be a relatively low-risk oil sands investment given the high contribution of on-stream assets, its strong balance sheet and the outlook for significant free cash generation – all while the company continues to increase oil sands output.

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. Furthermore, Suncor should be able to deliver this growth while generating $1 billion-$4 billion per year of free cash flow.

We believe investor interest in oil sands continues to increase and that Suncor will re-emerge as a "go-to" oil sands investment. With defined growth through 2020 and another 15 billion barrels to develop beyond that, Suncor remains the king of the oil sands.

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, respectively – its closest peers. We believe that as Suncor continues to demonstrate improved reliability, the stock should be a strong performer.





Andrew Potter, CFA 1 (403) 221-5700 [email protected]

Kyle Balaux 1 (403) 216-3401 [email protected]

Nick Lupick 1 (403) 221-5049 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $47.50 SU-TSX (1/12/11) $37.68 Key Indices: Toronto, NYSE

3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $29.91-$39.45 Shares Outstanding 1,573.0M Float 1,562.0M Shrs Avg. Daily Trading Vol. 5,337,527 Market Capitalization $59,270.6M Dividend/Div Yield $0.40 / 1.1% Fiscal Year Ends December Net Asset Value $47.19 per Shr 2011 ROE (E) 9.0% Net Debt $8,318.0M Preferred Nil Common Equity $37,105.0M Convertible Available No Earnings per Share Current 2009 $0.60A 2010 $1.43E 2011 $2.18E P/E 2009 62.8x 2010 26.3x 2011 17.3x Cash Flow per Share 2009 $2.37A 2010 $3.91E 2011 $4.92E P/CF 2009 15.9x 2010 9.6x 2011 7.7x Company Description Suncor is an integrated oil company approximately 85% levered to oil. Suncor has 392,000 Bbls/d of oil sands capacity that it will continue to grow through 2015. There are no major shareholders. www.suncor.com

Suncor Is Still King Of The Oil Sands - January 17, 2011

90

Suncor Energy Inc. (SU-TSX, NYD) Sector OutperformerCurrent Price: $37.68 Analyst: Andrew Potter, CFA Ph: (403) 221-5700 E-mail: [email protected] Target: $47.50 Nick Lupick, Ph: (403) 221-5049 E-mail: [email protected] Return: 26.1% Kyle Balaux, Ph: (403) 216-3401 E-mail: [email protected]

Financial Statistics And Current Valuation 2010E Net Asset Valuation - 2009Share Price ($) $37.68 Total Risked Asset Value $77,627Weighted Average Diluted Shares O/S 1,573 Total Risked NAVPS - 9% $47.19Market Capitalization - $M $59,267 P/NAVPS (Risked) 80%Net Debt - $mm $10,256 Target P/NAVPS (Risked) 101%Enterprise Value - $M $69,523 Total Unrisked Asset Value $88,511Float - mm 1,562 Total Unrisked NAVPS - 9% $53.80Average Trading Volume (50 Day) 5,337,527 P/NAVPS (Unrisked) 70%Annual Dividend / Yield $0.40 / 1.1% Target P/NAVPS (UnRisked) 88%

CIBC Deck 2010E 2011E 2012E 2013E 2014E 2015E 2016ENYMEX WTI (US$/Bbl) US$61.99 US$79.51 US$85.00 US$90.00 US$95.00 US$95.00 US$95.00Edmonton Par (C$/Bbl) $66.42 $77.55 $84.12 $89.07 $94.02 $94.02 $94.02Western Canadian Select (C$/Bbl) $58.61 $67.30 $69.40 $74.23 $75.22 $75.22 $75.22NYMEX Gas (US$/Mcf) US$3.94 US$4.37 US$4.75 US$5.25 US$6.00 US$6.00 US$6.00AECO (C$/Mcf) $3.99 $3.99 $4.35 $4.85 $5.50 $5.50 $5.50CRCK321 (US$/Bbl) US$8.23 US$9.67 US$9.00 US$9.00 US$9.00 US$9.00 US$9.00FX (US$/C$) $0.88 $0.97 $0.97 $0.97 $0.97 $0.97 $0.97

Operating Statistics 2010E 2011E 2012E 2013E 2014E 2015E 2016EWestern Canada Natural Gas Production - mmcf/d 429 380 372 365 358 350 343Syria Natural Gas Production - mmcf/d 64 90 90 90 100 100 100Natural Gas (MMcf/d) 493 470 462 455 458 450 443Western Canada Oil & Liquids Production - bbl/d 6,313 5,500 5,390 5,282 5,177 5,073 4,972Oil Sands Production - bbl/d 283,257 295,509 358,125 408,875 486,875 502,500 556,000North Sea Oil Production - boe/d 53,569 58,650 59,800 59,800 59,800 59,800 59,800East Coast Oil Production - bbl/d 68,585 62,552 64,200 65,119 62,906 57,800 52,044Libya Oil Production - bbl/d 35,300 40,000 40,000 45,000 50,000 50,000 50,000Synthetic Crude Oilsands Production - bbl/d 35,211 34,860 38,850 39,900 42,000 42,028 52,059Oil & Liquids (bbl/d) 482,234 497,071 566,365 623,976 706,758 717,201 774,874Production - MBoe/d 564 575 643 700 783 792 849Natural Gas % 15% 14% 12% 11% 10% 9% 9%Oil Sands % 56% 57% 62% 64% 68% 69% 72%Production Per Share (Boe/d per MM FD) 359 366 409 445 498 504 540Production Growth Per Share - % 2% 12% 9% 12% 1% 7%Production Per Share (Boe/d per MM FD) - Debt Adjsuted 306 312 349 379 424 429 460

Financial Statistics - $mm (except per share values) 2010E 2011E 2012E 2013E 2014E 2015E 2016EOil Sands EBITDA $4,151 $4,951 $6,985 $7,989 $8,751 $8,754 $10,116Natural Gas EBITDA $393 $308 $332 $361 $373 $361 $350East Coast & International EBITDA $3,159 $3,764 $4,097 $4,426 $4,469 $4,342 $4,224Downstream EBITDA $1,141 $1,054 $1,270 $1,484 $1,498 $1,513 $1,954Corporate EBITDA ($413) ($256) ($261) ($266) ($272) ($277) ($283)Total EBITDA $8,288 $9,724 $12,318 $13,874 $14,678 $14,546 $16,198Total Company Operating Cash Flow $6,560 $7,779 $10,129 $11,423 $11,728 $11,720 $13,141CFPS (Diluted) $3.91 $4.92 $6.40 $7.22 $7.41 $7.41 $8.30Operating Income $2,255 $3,456 $5,167 $6,112 $6,442 $6,382 $7,429Operating EPS (Diluted) $1.43 $2.18 $3.27 $3.86 $4.07 $4.03 $4.69Net Capex $3,881 $5,087 $8,922 $8,638 $8,868 $8,075 $8,087Net Capex/Cash Flow - % 59% 65% 88% 76% 76% 69% 62%Free Cash Flow $2,679 $2,692 $1,207 $2,786 $2,860 $3,645 $5,053

Debt Analysis 2010E 2011E 2012E 2013E 2014E 2015E 2016ENet Debt - $mm $10,256 $8,318 $7,736 $5,575 $3,340 $320 ($4,109)Net Debt/Cash Flow 1.6x 1.1x 0.8x 0.5x 0.3x 0.0x nmNet Debt/EV 0.1x 0.1x 0.1x 0.1x 0.0x 0.0x nm

Valuation 2010E 2011E 2012E 2013E 2014E 2015E 2016EEV / DACF 10.9x 8.2x 6.4x 5.5x 5.2x 4.9x 4.1x Target EV / DACF 13.2x 10.0x 7.7x 6.7x 6.4x 6.1x 5.2x P/EPS 26.3x 17.5x 11.7x 9.9x 9.4x 9.5x 8.1x Target P / EPS 33.1x 21.7x 14.5x 12.3x 11.7x 11.8x 10.1x


Suncor Is Still King Of The Oil Sands - January 17, 2011

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Company Update

January 17, 2011 Banks

Toronto-Dominion Bank Revenue Growth To Drive Outperformance In F2011

In what is expected to remain a challenging economic environment, we believe revenue growth will be a key success factor for the Canadian banks. Our top pick in the sector is TD Bank, as we expect strength from its Canadian and U.S. retail franchises will help drive outperformance in F2011.

TD recently announced the US$6.3 billion acquisition of auto lender Chrysler Financial. The purchase complements TD's existing U.S. platform by creating a vehicle to deploy its large U.S. deposit base. Given its strategic potential and tolerable financial implications, we view the deal favorably.

While TD left its dividend unchanged in Q4/F10, management noted it will be providing guidance on the dividend in the upcoming quarter. TD's payout ratio currently falls in the middle of its target range (based on our F2011 estimates), implying an increase could be feasible in the near term.

Valuation also supports a positive view on the shares. TD trades at a 2% premium on F11 earnings relative to peers compared with an 8% pre-crisis 10-yr average premium. On a P/B basis, it trades at a 21% discount to its peers, compared with a historical average discount of 5%. We rate TD SO.





Robert Sedran, CFA 1 (416) 594-7874 [email protected]

Meny Grauman, CFA 1 (416) 956-3723 [email protected]

Mehmed Rizvanovic, CFA (416) 594-7283 [email protected]

Stock Rating:

Sector Outperformer

Sector Weighting:

Market Weight 12-18 mo. Price Target $84.00 TD-TSX (1/12/11) $74.20 Key Indices: TSXFinSv

3-5-Yr. EPS Gr. Rate (E) 10.0% 52-week Range $61.25-$77.37 Shares Outstanding 878.5M Float 878.5M Shrs Avg. Daily Trading Vol. 2,121,000 Market Capitalization $65,184.7M Dividend/Div Yield $2.44 / 3.3% Fiscal Year Ends October Book Value $44.29 per Shr 2011 ROE (E) 13.8% LT Debt $12,506.0M Preferred $3,394.00M Common Equity $38,908.0M Convertible Available No Earnings Per Share Current 2010 $5.77A 2011 $6.36E 2012 $7.14E P/E 2010 12.9x 2011 11.7x 2012 10.4x Cash EPS excluding one-time items. Company Description TD Bank is one of Canada's leading financial institutions, and offers a full array of financial products and services to over 18 million customers worldwide.

www.tdbank.ca

Revenue Growth To Drive Outperformance In F2011 - January 17, 2011

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Sector OutperformerRobert Sedran, CFA (416-594-7874) [email protected]

Current Price: C$74.20 Meny Grauman, CFA (416-594-3723) [email protected] To 18-Month Price Target: C$84.00 Mike Rizvanovic, CFA (416-594-7283) [email protected]

All Figures in $ millions, except per share data (excl. one-time items)KEY MULTIPLES F2009A F2010A F2011E F2012E OUR THESISP/E Multiple 13.5x 12.9x 11.7x 10.4xPeer average 11.6x 10.6x

Q4-10P/BVPS 1.7xPeer average 2.1x

OPERATING PERFORMANCE F2009A F2010A F2011E F2012E SEGMENTED EARNINGS CONTRIBUTIONCore cash EPS $5.50 $5.77 $6.36 $7.14Annual EPS growth 1.5% 4.9% 10.1% 12.3%Core cash ROE 13.7% 13.7% 13.8% 14.4%Efficiency ratio 61.1% 60.3% 59.8% 58.6%Operating leverage (YoY) 9.3% (1.5% ) 1.1% 2.3%

CREDIT METRICS F2009A F2010A F2011E F2012ELoan loss rate (1) 0.83% 0.63% 0.46% 0.39%

F2009A Q4-10Gross impaired loans 2,311 3,456Specific ACLs 558 677Total ACLs 2,639 2,587Classical Coverage ratio (2) 114% 75%Specific ACLs to GILs 24% 20%General ACLs as % of Gross Loans & BAs 0.78% 0.68%

KEY EARNINGS DRIVERS F2009A F2010A F2011E F2012E FORWARD P/E MULTIPLE RELATIVE TO PEER GROUP (based on consensus estimates)Core net interest income 10,254 10,808 11,612 12,416 % change 23.6% 5.4% 7.4% 6.9%Total capital markets related revenue (3) 3,833 3,248 3,063 3,155 % change 88.2% (15.3%) (5.7%) 3.0%Provision for credit losses 2,016 1,685 1,320 1,200 % change 93% (16%) (22%) (9%)Non-interest expenses 11,669 12,056 12,287 12,699 % change 18.3% 3.3% 1.9% 3.3%

CAPITAL MEASURES F2009A F2010A F2011E F2012ETier 1 capital ratio 11.3% 12.2% 12.8% 13.8%Tangible common equity to RWA 9.4% 11.2% 11.8% 12.6%Tangible common equity to tangible assets 3.3% 3.7% 4.0% 4.3%Risk Weighted Assets 189,585 199,910 215,168 229,159

LOAN BOOK F2009A F2010A F2011E F2012E P/BVPS MULTIPLE RELATIVE TO PEER GROUPResidential mortgages 65,665 71,507 74,410 79,249Personal and credit cards 102,509 109,750 121,857 129,781Business and government 87,322 91,072 94,770 100,932Gross Loans 255,496 272,329 291,037 309,962Acceptances 9,946 7,757 8,233 8,738Total Gross Loans & Acceptances 265,442 280,086 299,270 318,701

Notes:(1) PCLs as a % of av erage net loans and acceptances (ex cl. repos).(2) Total ACLs as a % of GILs.(3) Ex cludes gains/(losses) on inv estment securities.

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. 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. TD remains rated Sector Outperformer.

57% 51% 59% 61%

18%12%

12% 12%11%

23%19% 17%

-10%

19% 21% 20% 22%

-8% -13%-6%-20%

0%

20%

40%

60%

80%

100%

120%

F2008A F2009A F2010A Q4-10Canadian P&C Banking Wealth Management Wholesale Banking U.S. P&C Banking Corporate

60%

80%

100%

120%

140%

160%

Jan-

01

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10-y ear Av erage Relativ e P/B = 95% Current Relativ e P/B = 79%

70%

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150%

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Current Relativ e P/E 6-month Mov ing Av eragePlus 1 Standard Dev iation Minus 1 standard Dev iation

10-y ear Av erage Relativ e Fw d P/E: 101% Current Relativ e Fw d P/E: 102%

Toronto-Dominion Bank (TD-TSX)


Revenue Growth To Drive Outperformance In F2011 - January 17, 2011

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


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IMPORTANT DISCLOSURES:

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

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

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

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


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Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.: Stock Prices as of 01/17/2011: 5N Plus, Incorporated (2g) (VNP-TSX, C$6.68, Sector Outperformer) Agnico-Eagle Mines Limited (2f, 7) (AEM-NYSE, US$69.27, Sector Performer) Alamos Gold Inc. (AGI-TSX, C$16.75, Sector Outperformer) Allied Nevada Gold Corp. (2g) (ANV-AMEX, US$24.45, Sector Outperformer) Angle Energy Inc. (2a, 2c, 2e, 2g) (NGL-TSX, C$7.53, Sector Outperformer) ARC Resources Ltd. (2a, 2e, 2g, 7) (ARX-TSX, C$25.24, Sector Performer) Aurizon Mines Ltd. (2g) (ARZ-TSX, C$6.38, Sector Outperformer) Barrick Gold Corporation (2f, 2g, 7) (ABX-NYSE, US$47.08, Sector Outperformer) Baytex Energy Corp. (2g) (BTE-TSX, C$48.05, Sector Performer) Black Diamond Group Limited (2g) (BDI-TSX, C$21.66, Sector Outperformer) Bombardier Inc. (2a, 2d, 2e, 2f, 2g, 7, 12) (BBD.B-TSX, C$5.67, Sector Outperformer) Bonavista Energy Corporation (2a, 2c, 2e, 2g, 7) (BNP-TSX, C$28.85, Sector Performer) Bonterra Energy Corp. (2g) (BNE-TSX, C$52.99, Sector Performer) Brookfield Office Properties Canada REIT (2a, 2c, 2e, 2g) (BOX.UN-TSX, C$21.92, Sector Outperformer) C&C Energia Ltd. (2g) (CZE-TSX, C$12.05, Sector Outperformer) CAE Inc. (2g, 4a, 4b, 9) (CGT-NYSE, US$5.97, Sector Outperformer) Canadian National Railway Co. (2g, 7, 9) (CNR-TSX, C$68.14, Sector Outperformer) Canadian Pacific Railway Ltd. (2g, 7, 9) (CP-TSX, C$66.42, Sector Outperformer) Celestica Inc. (2g, 3a, 3c, 6a, 7, 12) (CLS-NYSE, US$9.84, Sector Outperformer) Cenovus Energy Inc. (2g, 7, 9) (CVE-TSX, C$32.07, Sector Performer) Centerra Gold Inc. (2g) (CG-TSX, C$17.22, Sector Underperformer) CGA Mining Limited (2g, 7) (CGA-TSX, C$2.64, Sector Outperformer) Chartwell Seniors Housing REIT (2a, 2c, 2e, 2g) (CSH.UN-TSX, C$8.43, Sector Outperformer) Coeur d'Alene Mines Corp. (2g) (CDE-NYSE, US$24.87, Sector Performer) Crescent Point Energy Corp. (2a, 2c, 2e, 2g, 7) (CPG-TSX, C$42.77, Sector Outperformer) Daylight Energy Ltd. (2a, 2e, 2g) (DAY-TSX, C$9.90, Sector Outperformer) Eldorado Gold Corporation (2g) (EGO-NYSE, US$17.12, Sector Outperformer) Empire Company Limited (2g, 7, 13) (EMP.A-TSX, C$53.72, Sector Outperformer) EnCana Corporation (2g, 7, 9) (ECA-NYSE, US$31.51, Sector Outperformer) Endeavour Silver Corp. (2a, 2c, 2e, 2g) (EDR-TSX, C$6.04, Sector Performer) Enerplus Corporation (2g, 7) (ERF-TSX, C$32.21, Sector Performer) First Majestic Silver Corp. (2g) (FR-TSX, C$12.02, Sector Performer) First Quantum Minerals Ltd. (FM-TSX, C$119.23, Sector Outperformer) Fortuna Silver Mines Inc. (2a, 2c, 2e, 2g) (FVI-TSX, C$4.14, Sector Outperformer) Franco-Nevada Corporation (2g, 4a, 4b, 7) (FNV-TSX, C$30.19, Sector Outperformer) Gammon Gold Inc. (2g) (GAM-TSX, C$7.69, Sector Underperformer) Genworth MI Canada Inc. (2a, 2c, 2e, 2g, 7) (MIC-TSX, C$27.30, Sector Outperformer) Gold Wheaton Gold Corp. (GLW-TSX, C$4.88, Sector Performer) Goldcorp Inc. (2a, 2c, 2e, 2f, 2g, 3a, 3c, 7) (GG-NYSE, US$40.59, Sector Outperformer) Golden Star Resources Ltd. (2g) (GSS-AMEX, US$3.86, Sector Performer) H&R REIT (2a, 2c, 2e, 2g, 7) (HR.UN-TSX, C$20.23, Sector Outperformer) Hecla Mining Company (2g) (HL-NYSE, US$9.58, Sector Underperformer) IAMGOLD Corporation (2g) (IAG-NYSE, US$17.42, Sector Outperformer) Imperial Oil Limited (2g) (IMO-TSX, C$42.26, Sector Underperformer) Jean Coutu Group (PJC) Inc. (2g, 7, 12) (PJC.A-TSX, C$9.27, Sector Outperformer) Kinross Gold Corporation (2g) (KGC-NYSE, US$16.80, Sector Performer) Kirkland Lake Gold Inc. (2g) (KGI-TSX, C$14.17, Sector Outperformer)


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Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.: (Continued) Stock Prices as of 01/17/2011: March Networks Corp. (2g) (MN-TSX, C$4.10, Sector Outperformer) Medusa Mining Limited (2g) (MLL-TSX, C$7.20, Sector Outperformer) NAL Energy Corporation (2a, 2c, 2e, 2g) (NAE-TSX, C$13.07, Sector Outperformer) New Gold Inc. (2g) (NGD-TSX, C$8.39, Sector Performer) Newmont Mining Corporation (2g, 3a, 3b) (NEM-NYSE, US$55.72, Sector Performer) Northgate Minerals Corporation (2a, 2c, 2e, 2g) (NXG-AMEX, US$2.78, Sector Outperformer) Onex Corporation (2g, 12) (OCX-TSX, C$32.64, Sector Outperformer) Pacific Rubiales Energy Corp. (2g) (PRE-TSX, C$32.07, Sector Outperformer) Pan American Silver Corp. (2a, 2e, 2g) (PAAS-NASDAQ, US$35.07, Sector Outperformer) Pengrowth Energy Corporation (2g, 3a, 3c, 7) (PGF-TSX, C$13.39, Sector Performer) Penn West Petroleum Ltd. (PWT-TSX, C$25.08, Sector Outperformer) Perpetual Energy Inc. (2a, 2c, 2e, 2g) (PMT-TSX, C$4.06, Sector Underperformer) PetroBakken Energy Ltd. (2g) (PBN-TSX, C$21.20, Sector Outperformer) Petrominerales Ltd. (2g) (PMG-TSX, C$37.23, Sector Outperformer) Peyto Exploration & Development Corp. (2a, 2c, 2e, 2g) (PEY-TSX, C$18.70, Sector Performer) Progress Energy Resources Corp. (2a, 2c, 2e, 2g) (PRQ-TSX, C$13.00, Sector Outperformer) Quadra FNX Mining Ltd. (2a, 2e, 2g) (QUX-TSX, C$17.01, Sector Outperformer) Rogers Communications Inc. (2a, 2c, 2e, 2g, 3a, 3c, 7, 13) (RCI.B-TSX, C$35.90, Sector Outperformer) Royal Gold, Inc. (2a, 2c, 2e, 2g) (RGLD-NASDAQ, US$47.73, Sector Performer) Semafo Inc. (2a, 2c, 2e, 2g) (SMF-TSX, C$10.50, Sector Outperformer) Shaw Communications Inc. (2a, 2c, 2e, 2g, 3a, 3c, 13) (SJR.B-TSX, C$20.96, Sector Outperformer) Shoppers Drug Mart Corporation (2g) (SC-TSX, C$39.00, Sector Performer) Silver Standard Resources Inc. (2a, 2c, 2e, 2g) (SSRI-NASDAQ, US$23.44, Sector Underperformer) Silver Wheaton Corp. (2g) (SLW-NYSE, US$31.70, Sector Outperformer) Silvercorp Metals Inc. (2a, 2c, 2e, 2g) (SVM-TSX, C$10.15, Sector Performer) Suncor Energy Inc. (2g, 7, 9) (SU-TSX, C$38.19, Sector Outperformer) Taseko Mines Limited (2g) (TKO-TSX, C$5.99, Sector Performer) TD Bank (2a, 2c, 2d, 2e, 2f, 2g, 3a, 3c, 7) (TD-TSX, C$76.10, Sector Outperformer) Teck Resources Limited (2a, 2b, 2c, 2d, 2e, 2f, 2g, 3a, 3c, 7, 9, 12) (TCK.B-TSX, C$61.98, Sector Outperformer) Total Energy Services (2g) (TOT-TSX, C$13.81, Sector Performer) Trilogy Energy Corp. (2g) (TET-TSX, C$12.95, Sector Performer) Vermilion Energy Inc. (2g, 7) (VET-TSX, C$45.89, Sector Performer) Yamana Gold Inc. (2a, 2e, 2g) (AUY-NYSE, US$11.52, Sector Underperformer)

Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc.: Stock Prices as of 01/17/2011: Comcast (CMCSA-NASDAQ, US$22.72, Not Rated) Emergency Medical Services Corporation (EMS-NYSE, US$66.35, Not Rated) First Solar, Inc. (FSLR-NASDAQ, US$140.84, Not Rated) Skilled Healthcare Group Inc. (SKH-NYSE, US$11.30, Not Rated) Spirit AeroSystems, Inc. (SPR-NYSE, US$23.30, Not Rated)


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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

or more of a class of equity securities issued by this company. 8 An executive of CIBC World Markets Inc. or any analyst involved in the preparation of this research report has

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

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

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

11 The equity securities of this company are restricted voting shares. 12 The equity securities of this company are subordinate voting shares. 13 The equity securities of this company are non-voting shares. 14 The equity securities of this company are limited voting shares.


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CIBC World Markets Inc. Price Chart

For price and performance information charts required under NYSE and NASD rules, please visit CIBC on the web at http://apps.cibcwm.com/sec2711 or write to CIBC World Markets Inc., Brookfield Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attn: Research Disclosure Chart Request.

CIBC World Markets Inc. Stock Rating System

Abbreviation Rating Description

Stock Ratings

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

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

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

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

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

Sector Weightings**

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

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

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

NA None Sector rating is not applicable.

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

Ratings Distribution*: CIBC World Markets Inc. Coverage Universe

(as of 17 Jan 2011) Count Percent Inv. Banking Relationships Count Percent

Sector Outperformer (Buy) 140 46.4% Sector Outperformer (Buy) 135 96.4%

Sector Performer (Hold/Neutral) 127 42.1% Sector Performer (Hold/Neutral) 119 93.7%

Sector Underperformer (Sell) 28 9.3% Sector Underperformer (Sell) 26 92.9%

Restricted 6 2.0% Restricted 6 100.0%

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

Important disclosures required by IIROC Rule 3400, including potential conflicts of interest information, our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at http://researchcentral.cibcwm.com under 'Quick Links' or by writing to CIBC World Markets Inc., Brookfield Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attention: Research Disclosures Request.


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Legal Disclaimer

This report is issued and approved for distribution by (a) in Canada, CIBC World Markets Inc., a member of the Investment Industry Regulatory Organization of Canada (“IIROC”), the Toronto Stock Exchange, the TSX Venture Exchange and CIPF, (b) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority ("FSA"), and (c) in Australia, CIBC Australia Limited, a member of the Australian Stock Exchange and regulated by the ASIC (collectively, "CIBC World Markets") and (d) in the United States either by (i) CIBC World Markets Inc. for distribution only to U.S. Major Institutional Investors (“MII”) (as such term is defined in SEC Rule 15a-6) or (ii) CIBC World Markets Corp., a member of the Financial Industry Regulatory Authority (“FINRA”). U.S. MIIs receiving this report from CIBC World Markets Inc. 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This report does not take into account the investment objectives, financial situation or specific needs of any particular client of CIBC World Markets. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances. 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