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To: NOW who wrote (225593)	3/8/2013 12:50:30 PM
From: Goose94	Read Replies (2) \| Respond to of 313059

Two names: Rick Rule and Brent Cook both on BNN.ca this week.

To: NOW who wrote (225593)	3/8/2013 1:08:48 PM
From: Veteran98	Read Replies (2) \| Respond to of 313059

LYD... TD 12-Month Target Price: C$4.00? Lydian International Ltd. (LYD-T) C$1.64 Resource Ounces Up 18%, Grade Up 13% Event Yesterday morning, Lydian International published an updated resource estimate for its flagship Amulsar (100%) heap leach gold project in Armenia, which is expected to be the basis for reserves in an updated Feasibility Study (FS) expected in July. Total open pit gold resources grew 18% to 4.3 Moz grading 0.89 g/t (from 3.7 Moz grading 0.79 g/t in January 2012) using a 0.3 g/t cut-off (US$1,200/oz). The increase was largely the product of significantly higher grades. Impact - POSITIVE Given the substantial increase in grade, Lydian is positioned to report markedly improved project economics at Amulsar in the upcoming study, in our view. Within the revised estimate, total M&I ounces were essentially flat at 2.5 Moz, while the average grade rose 19% to 0.95 g/t (from 0.80 g/t). We expect this figure to be the basis for the FS, implying a substantial improvement relative to the current reserve of 2.3 Moz at 0.75 g/t. We are revising our project model to incorporate the updated estimate with an adjustment for expected mining dilution, modeling a reserve of 2.5 Moz at 0.89 g/t. With the modeled increase in grade, average LOM production in our model rises to 230 koz at total cash costs of US$447/oz (from 184 koz at US$530/oz). To reflect the recent pullback in the stock, we are also lowering our equity issuance price assumption to $1.50/share (from $2.50). Net of these changes, our corporate NAV5% increases to $5.10/share (from $4.97). We apply a 0.8x target multiple to reach a 12-month target price of $4.00/share (unchanged). The company trades at 0.32x NAV5% versus its developer peers at 0.42x, with permitting risk the major limiting factor in its valuation, in our view. Nevertheless, we believe Amulsar is one of the most robust development-ready gold projects of a significant size globally and together with its relatively modest developments costs (estimated at $270mm) positions the company as a particularly attractive acquisition target. We maintain our SPECULATIVE BUY recommendation. Revised Estimate Continues Record of Significant Resource Growth at Amulsar ? 18% Increase in Total Resources: The updated statement, prepared by AMC Consultants, included results from an additional 19,867m of diamond and RC drilling (for a total of 109,650m), which were completed subsequent to the January 2012 estimate. Overall, total resources increased 18% from the prior estimate and have now grown by over 40% in the past 12 months. ? Growth Driven by Increase in Grade: The increase was largely the product of significantly higher grades, in our view. We note that the average grade in the M&I category rose 19% to 0.95 g/t (from 0.80 g/t). In comparison, the current reserve of 2.3 Moz averages 0.75 g/t. We believe this positive variance suggests the potential for a significant improvement in project economics, given that the new estimate will be the basis for an updated reserve that will be incorporated in a revised FS. ? Change in Resource Methodology not a Concern: The resource was prepared using multiple indicator kriging grade interpolation whereas the previous study was based on inverse distance (ID) methodologies. We understand the change was influenced by the company’s newly developed 3D geology model that has reportedly improved the company’s understanding of grade boundaries and continuity. Furthermore, we understand if the company applied the ID methodology, the difference in total ounces reported would have likely been less than 5%, with an increase in tonnes offset by a slight decrease in reported grade. ? Good Potential for Further Growth: The company plans to continue infill, extension and exploration drilling this year in an effort grow its resource base further, with another resource update expected in Q1/14. Management commented that there is the potential to find additional gold resources particularly towards the north, east and to depth at the Erato, Tigranes and Artavasdes deposits, while Arshak remains open along strike towards the south-east. Outlook We anticipate the following timeline of key developments: ? Additional results from 25,000m drilling program at Amulsar – Ongoing ? Updated Feasibility Study – July ? Completion of the remaining permitting milestones (EIA, ESIA, etc.) – H1/13 ? Updated resource estimate – Q1/14 Valuation We calculate that Lydian is currently trading at 0.32x our corporate NAV5%. This is below the average for development-stage companies, which trade at an average of 0.42x NAV5%. Exhibit 2. Lydian International: P/NAV Peer Comparison 0.29 0.32 0.32 0.37 0.38 0.38 0.53 0.58 0.62 0.00 0.25 0.50 0.75 1.00 GUY XRC LYD CNL BSX RMX AUM TXG THO P/NAV (x) Average = 0.42x Source: TD Securities. Justification of Target Price We generate our target price by applying a 0.8x target multiple to our fully-financed corporate NAV5% calculated at a gold price of US$1,650/oz. We use this multiple to balance our view of the high level of risk associated with our valuation and the strong exploration upside potential we see at Amulsar. Key Risks to Target Price Gold and fuel price risk; foreign exchange rate risk; forecasting risk relating to deposit size; financial and market risks; technical risk; risk related to the cost and availability of financing; capital and operating cost risks; timing risk; political risk; permitting risk; environmental risk; title risk and risks related to the acquisition of surface rights; the proposed use of controversial mining techniques; illegal mining risk; and staffing and key personnel retention risk. TD Investment Conclusion We believe Amulsar is one of the most robust development-ready gold projects of a significant size globally and together with its relatively modest developments costs positions the company as a particularly attractive acquisition target. We maintain our SPECULATIVE BUY recommendation.