SECUTOR

CAPITAL MANAGEMENT CORPORATION

COMPANY SUMMARY
Project:
Loca on:
Ownership:
Commodity:
Status:
Resource:
Catalys...
Commerce Resources Corp

31 January 2014

SCMC: What is the bo leneck in the process flowsheet? What are the next steps nec...
Commerce Resources Corp

31 January 2014

SCMC: Commerce recently announced drill intersec ons from Ashram including 61.40...
Commerce Resources Corp

31 January 2014

SCMC: What is the strategy for the next 12 months? What milestones are you aimin...
Commerce Resources Corp

31 January 2014

Secondly, we engaged Deloi e in 2012 to act as our financial advisor, which means...
Commerce Resources Corp

31 January 2014

SCMC: What is the distribu on of rare earths like at Ashram and how does it comp...
Commerce Resources Corp

31 January 2014

SCMC: In the past, there has been a lot of emphasis placed on being the first rar...
Commerce Resources Corp

31 January 2014

SCMC: How are the reforms in China impac ng the market? Does the price differen a...
Commerce Resources Corp

31 January 2014

Thirdly, what is perhaps the second most common ques on I am asked is “How do yo...
Commerce Resources Corp

31 January 2014

SCMC: Switching gears, Commerce also owns the Blue River Tantalum Project. What ...
Commerce Resources Corp

31 January 2014

SCMC: How does the Blue River Tantalum Project compare globally?
CG: The Blue Ri...
Commerce Resources Corp

31 January 2014

The information contained in this report was obtained from sources we believe to...
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Secutor Capital Management Corporation Interview with Chris Grove of Commerce Resources Corp.

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Secutor Capital Management Corporation interview with Chris Grove, Director of Commerce Resources Corp. (TSXv: CCE). (January 2014)

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Secutor Capital Management Corporation Interview with Chris Grove of Commerce Resources Corp.

  1. 1. SECUTOR CAPITAL MANAGEMENT CORPORATION COMPANY SUMMARY Project: Loca on: Ownership: Commodity: Status: Resource: Catalysts: Project: Loca on: Ownership: Commodity: Status: Resource: Catalysts: Ashram Deposit (Eldor) Nunavik Region, Northern QC 100 % REE Pre-Feasibility Stage 29.3 Mt 1.90% TREO (M&I) 220 Mt at 1.88% TREO (Inferred) PFS, metallurgical results, joint venture partnership Upper Fir Deposit (Blue River) 250 km north of Kamloops, BC 100 % Tantalum, Niobium PEA complete 51.78 Mt at 192 ppm Ta₂O₅, 1490 ppm Nb₂O₅ (Indicated) 8.8 Mt at 186 ppm Ta₂O₅, 1660 ppm Nb₂O₅ (Inferred) Updated resource, metallurgical results MARKET DATA Price: Market Cap: Common Shares: Fully Diluted: 52 Wk Range: 30 Day Avg Vol: $ 0.21 $ 35.11 MM 167.18 MM 188.47 MM $ 0.05 - 0.26 418,350 31 January 2014 COMMERCE RESOURCES CORP V-CCE Rock Talk with Chris Grove, Director Recently, Secutor Capital interviewed Chris Grove, Director of Commerce Resources Corp: Commerce is focused on advancing its Ashram Rare Earth Project in Quebec as well as its Upper Fir Tantalum and Niobium Deposit in British Columbia. The Ashram Deposit is a carbonatite that hosts a well-balanced distribution of the rare earth elements, including all five of the most critical elements (neodymium, europium, dysprosium, terbium, and yttrium). Significantly, at Ashram, Commerce is able to produce a 43.6% total rare earth oxide (TREO) mineral concentrate at a recovery rate of 70.7% using conventional processing techniques. SCMC: Commerce is able to produce a total rare earth oxide (TREO) mineral concentrate grading 43.6%. The deposit is a carbonate intrusive complex hos ng the minerals bastnaesite, monazite, and xeno me. Can you discuss the metallurgy of the deposit? What advantages does the geology of the deposit lend to the metallurgy? TOP HOLDERS Marquest Asset Management Inc Zimtu Capital Corp Matrix Funds Management Zurcher Kantonalbank 5.36 % 2.25 % 0.40 % 0.28 % Source: Stockhouse Arie Papernick Equity Capital Markets apapernick@secutor.ca (416) 847-1220 Company Interview Lilliana Paoletti Analyst lpaoletti@secutor.ca (416) 545-1015 CG: As you are a geologist, you will appreciate that, by far, the most dominant REE deposit-type in produc on are carbona tes. Secondly, we were able to produce one of the highest grade mineral concentrates, out of the developing REE projects globally, using standard processing techniques because the Ashram Deposit is hosted by the three minerals that you have just men oned, which completely dominate current commercial processing. Furthermore, there are only four REE-bearing minerals – out of approximately 200 – that have ever been commercially processed. In the rare earth industry, mineralogy and metallurgy are everything.
  2. 2. Commerce Resources Corp 31 January 2014 SCMC: What is the bo leneck in the process flowsheet? What are the next steps necessary to advance the metallurgy? CG: There are no bo lenecks in the metallurgy or the mineralogy at this me; everything has moved along very quickly, rela vely speaking. Again, this is because we are going down a well-worn path that has historically yielded REE end-products. There are many next steps, but our focus is to con nue to improve recoveries across the spectrum. The next logical step is to scale-up the process to a pilot plant in order to generate enough feed material for the hydromet. We need to produce sufficient representa ve material so that we can op mize that part of the flowsheet and begin to evaluate the costs for the many op ons of end-products that we have. Simplified Flowsheet for the Production of a Rare Earth Mineral Concentrate Source: Company Filings SECUTOR CAPITAL MANAGEMENT CORP 2
  3. 3. Commerce Resources Corp 31 January 2014 SCMC: Commerce recently announced drill intersec ons from Ashram including 61.40 m of 2.15% TREO and 57.36 m of 2.28% TREO. What is the significance of these results? CG: These results were significant for a few reasons. First of all, this was an infill drill program, and these holes encountered less in-pit waste rock at surface than previously modeled in our PEA, thus adding more mineralized material to the resource which will be included in the next resource update. The conversion of the waste rock to ore will reduce costs since less overburden will have to be removed, effec vely making our low strip ra o even lower. Secondly, we did a couple of step-out holes which intersected an extension of the Deposit, adding mineraliza on approximately 60 meters to the northwest. Finally, the actual results that you men oned are some of the high-grade intercepts that we hit. These are above the average grade of the overall resource, which is in the 1.9% range, albeit a high-grade for such a huge deposit. Recent Drilling at the Ashram Deposit Source: Company Filings SECUTOR CAPITAL MANAGEMENT CORP 3
  4. 4. Commerce Resources Corp 31 January 2014 SCMC: What is the strategy for the next 12 months? What milestones are you aiming to achieve and what is your current cash posi on? CG: Overall, the main focus is to con nue to advance the metallurgy with the labs that we are working with, and to secure a joint venture partner with the current results and milestones that we have achieved. In regards to securing a joint venture partner, it is very difficult to talk about ming, except to say that this program moves ahead with old interest in the wings and with new interest coming to us all the me. There are some macro issues to consider though; for example very li le business is done in the month of January in China, and we do not expect to hear from the REE industry in that country un l a er the Year of the Horse has begun – in February. Other goals include finishing off the infill drilling, upda ng the resource, con nuing with economic trade-off studies that examine where to locate the docking facility and the road that terminates there, con nuing with the weather sta on data collec on which is needed to ascertain where to place an air strip on-site, as well as con nuing with the environmental baseline data monitoring. Our next set of financials will be out at the end of February. Our cash posi on is $900,000, and we have mining credits of $1.9 million, which is expected shortly. SCMC: How is work progressing on the Pre-Feasibility Study? What work remains to be done and what is the ming like? CG: As touched on, Roche is working on several project aspects at this me towards the comple on of the PFS for the Ashram Deposit. In terms of the metallurgy, we are almost at the point where we can shi our focus to the hydrometallurgy and to the evaluation of end-product op ons. The ming of the comple on of the PFS is related to capital, and we are looking to secure addi onal financing to accomplish this in a mely manner. SCMC: Since the rare earth industry is a bou que chemical industry with different end-users with different needs, which markets are you targe ng? Downstream processing is a cri cal component of the business since concentrates are heavily discounted by the market. Are you looking to sell a mixed concentrate? Or are you considering separa ng the individual rare earths into oxides? What milestones would you have to complete to move forward with a poten al strategic partner? CG: Let me answer your last ques on first. I believe that the milestones that we have already achieved, including being one of a select few REE deposits in the world that can produce a be er than 40% mineral concentrate, puts us in a posi on where we can be op mis c that we will secure a joint venture partner. When we were in China, just following the release of the Ashram PEA (June 2012), one of the largest producers of REE’s said to us that they believed that we have the best deposit. However, at this point, we had only produced a 10% mineral concentrate, and the producer said that that they would be more interested if we were able to produce a be er than 30% concentrate. We are now capable of producing a be er than 40% mineral concentrate. SECUTOR CAPITAL MANAGEMENT CORP 4
  5. 5. Commerce Resources Corp 31 January 2014 Secondly, we engaged Deloi e in 2012 to act as our financial advisor, which means our corporate matchmaker. Through them, we have met basically everyone who is anyone in the REE world. We met companies who would be appropriate joint venture partners and we have a significant number of Non-Disclosure Agreements signed at this me. Addi onally, when talking about a concentrate one must be quite specific. Our PEA evaluated selling a mixed REO (rare earth oxide) or REC (rare earth carbonate) concentrate and yes, there are ready markets for these products since they are the basic feed stock for the separa on facili es. Furthermore, there is excess separa on capacity for this type of concentrate in China. Regarding end-products, at this me we are looking at several op ons which include a mixed REO, a mixed REC, and a par al separa on. This can be done for a few products without too much difficulty when compared to a full oxide separa on. This includes a cerium oxide product, a didymium (praseodymium + neodymium) product, an SEG (samarium, europium, and gadolinium) mixed oxide product, and/or an HREO mixed product. However, if a JV partner is interested in separated oxides, we would seriously evaluate the steps to achieve this for the endproducts that they are looking for. SCMC: The last PEA men oned that Commerce is considering shipping concentrate to Montreal for further processing. What is the advantage of this plan? CG: The largest cost of any REE project is processing. The best way to reduce this cost is to upgrade the ore to a mineral concentrate, as this decreases all of the downstream processing costs. This also allows for a lower volume of material to be shipped to an area with be er access to the skilled personnel and consumables required for the process. We have recently completed a hydromet trade-off loca on study and preliminary results indicated that a loca on off-site will be more economic for us. However, Montreal was not one of those loca ons. We are looking at somewhere further east along the St. Lawrence Seaway. SCMC: How does your mineral concentrate compare to those that are currently produced in China? CG: The mineral concentrate that we have produced compares very favorably. The non-ionic clay deposits in China produce mineral concentrate in excess of 30% TREO. We are one of only two REE deposits in development that have been able to produce a be er than 30% mineral concentrate. Note that Molycorp and Lynas are also able to produce mineral concentrates in excess of 30% TREO, so this could be seen as a requirement for produc on. SECUTOR CAPITAL MANAGEMENT CORP 5
  6. 6. Commerce Resources Corp 31 January 2014 SCMC: What is the distribu on of rare earths like at Ashram and how does it compare to other Canadian juniors? CG: We have a well-balanced distribu on with considerable cri cal rare earth oxides (CREO) including neodymium (Nd), europium (Eu), and very appreciable amounts of terbium (Tb), dysprosium (Dy), and y rium (Y). In fact, our middle and heavy rare earth oxide (MHREO) zone has more dysprosium than Matamec Explora on’s (V-MAT) Kipawa Deposit on a gram per ton basis. We believe that our distribu on is very fortunate, as it gives us the ability to weather price fluctua ons of all of the cri cal rare earth oxides. Ashram’s broad REE distribu on gives us a be er chance at remaining economic in a tough market climate, or if someone else does get into produc on for one or more of the CREO’s for example. Generally speaking, and although it is our corporate belief that you do not promote your project by saying nega ve things about others in the sector, globally REE projects breakdown into being either light or heavy projects. With our distribu on at the Ashram Deposit, we basically have all of the REE’s in significant quan ty, and this is very rare indeed. SCMC: There is a lack of infrastructure in the Eldor project area. Do you think that there could be any synergies with Plan Nord? Do you think that the CAPEX of $763 million quoted in the PEA can be improved upon? CG: This is very true – the lack of infrastructure around the Ashram Deposit. However, the CAPEX for the road has already been reduced significantly. We have op mized the route and reduced the length by at least 20 kilometers. The current plan is easier to build than what was envisioned in the PEA (by SGS) with the bridges being shorter in length and less costly per kilometer of road. The only remaining aspect is to confirm the exact local of the docking facility as this will determine the final length of the road. In terms of the current administra on in Quebec, I believe that li le has been done to advance the Plan Nord, which is arguably seen by the current government as a hold-over from the Jean Charest Liberals. However, I think that this administra on does know which side of the bread gets bu ered and may at some point, do something posi ve for this infrastructure plan. Furthermore, Adriana Resources’ (V-ADI) Lac Otelnuk Project is just 80 kilometers south of Ashram. It is one of the largest mining projects in development of all me for Quebec, and for Canada, and it absolutely needs a huge amount of infrastructure. If Adriana’s Lac Otelnuk Project gets the railroad, the highway, and the power lines all set up so that it can move ahead, then there may be some opportuni es for us there to tap into. Realis cally, and as is costed in our PEA, we can con nue on our own steam without any benefits from what might be realized in the future in terms of the overall “Plan Nord”. However, we would not look a gi horse in the mouth. SECUTOR CAPITAL MANAGEMENT CORP 6
  7. 7. Commerce Resources Corp 31 January 2014 SCMC: In the past, there has been a lot of emphasis placed on being the first rare earth project to the market, especially for heavy rare projects. The argument is that whoever reaches produc on first will sa sfy REE demand, at least in the short-term. Would you agree with this? CG: First of all, I think that there is enough space for several REE deposits to become mines outside of China. Secondly, since we spent so much me in China over the last couple of years, I would also say that China will most likely become a much larger importer of a wide suite of REE’s – albeit arguably those from deposits containing minerals that they already know how to process, like the minerals xeno me, bastnaesite, and monazite contained at Ashram. China is already impor ng xeno me heavies. Overall, each REE has a different supply-demand picture, and we are interested in being a long-term, secure supplier of many of the REE’s. The short-term is just not as relevant as we have a deposit that could be a game changer for decades, if not genera ons. This is the kind of me horizon that China understands and prepares for. SCMC: Can you give a brief overview of the trends in the rare earth market? How is the industry changing? Do you think that supply and demand are rela vely in balance? What are some of the price drivers for the rare earth sector? CG: In terms of the price drivers for the REE’s, they are the same as any other commodity – supply and demand. REE prices have generally started to push up above their recent lows. Also, there hasn’t been any appreciable new produc on, coming from Molycorp (NYSE:MCP), Lynas (ASE:LYC), or anywhere else. What we all saw happen to REE prices between 2009 and 2011 was perhaps one of the biggest commodity bubbles of all me. For example, during this period the price for dysprosium oxide increased from US$90 per kilogram to US$3,000 per kilogram. The following drop off a cliff for basically all of the REE prices in July 2011 makes complete sense because there was a gargantuan glut of the REE’s, and no one was buying anything for quite a long me. Demand is hard to gauge when there are such low sales, but arguably, real use of the REE’s has actually gone up and con nues to increase. The fact that there is some upward pressure on prices should have been expected. Overall, China has significantly increased its domes c consump on of REE’s. Addi onally, China is consolida ng its rare earth industry to ghten control, to improve environmental standards, to improve its own extrac ve processes and recoveries, and to reduce illegal smuggling. The air quality in China varies from poor to horrible, and I would say that the “electrifica on” of their transporta on industry is one of the paramount interests of the current Five Year Plan, which is called the “Green Plan”. This poten ally could mean more hybrid or electric vehicles on the roads in China, and more manufacturing within China of REE permanent magnets that are used in these electric motors. SECUTOR CAPITAL MANAGEMENT CORP 7
  8. 8. Commerce Resources Corp 31 January 2014 SCMC: How are the reforms in China impac ng the market? Does the price differen al between the China rare earth price and the rest of the world price con nue to narrow? CG: The reforms in China are about exer ng control over the market and the output within China, and following that, the rest of the world. The consolida on in China of the rare earth sector has poten ally run its course though, and so I expect to see con nued upward price pressure in the vacuum of new supply. With the decision of the WTO going against China, I would say that the price difference has narrowed, but this is an assump on that is pre y ques onable because what the Chinese do within China is difficult to be “seen”. SCMC: Are light rare earth projects s ll economic? Do you think that Molycorp and Lynas are driving down prices? Are there any lessons that you can take away from Molycorp or Lynas, these companies that made it to produc on? CG: I think that any light REE project will have to get used to factoring in much lower prices for the conceivable future. Molycorp will always be economic because it is by far the best deposit in the US. Further, their Sorbx technology could be a game change for cerium produc on. Lynas should be able to figure it out. They are too high-grade, and arguably too far along at this stage to stop. They are likely the highest grade mine in the world with good tonnage, so they do have op ons if roadblocks come up. They have spent enormous amounts on metallurgy and are now producing a mineral concentrate of be er than 30% TREO – again this seems to be a prerequisite to enter commercial produc on. SCMC: The rare earth industry is very complex. Pricing is opaque, demand is difficult to es mate, the metallurgy is very complicated, and there only two main public producers, Lynas and Molycorp. What do you think are some of the common misconcep ons that investors have for the space? How do you get them interested in the sector? CG: Generally, people don’t understand the value of crea ng a mineral concentrate. It really is the “be all and end all” to an economic REE deposit. The ability to reduce the mass of your ore by producing a mineral concentrate is key to reducing the amount of material that you have to transport, and to reducing the amount of acid needed to process the ore. This is huge. Secondly, investors should be aware that there is s ll an opportunity for a new producer of REE’s to enter the market. Prices have come down significantly but are generally above where they were in early 2009. Also, there has been almost no new produc on; the upside is s ll huge. SECUTOR CAPITAL MANAGEMENT CORP 8
  9. 9. Commerce Resources Corp 31 January 2014 Thirdly, what is perhaps the second most common ques on I am asked is “How do you guys plan to raise the $763 million needed to put your project into produc on”? The truth is that with such a project as we have, which generates approximately $1 million per day, (the payback period as outlined in our PEA is 27 months) the ini al capital is not raised by crea ng new equity. It is debt that arguably any corporate lender would lend with our economics, provided that we take the project to the next level of accuracy. Furthermore, we believe that the project economics will improve. The NPV in our PEA is $2.3 billion, and this was based upon us just producing a 10% concentrate, and we have just produced a 43.6% concentrate at no appreciable increase of opera ng cost. Lastly, the opportunity in the REE sector is actually be er today than it was during the period between 2009 and 2011. Now, the investor has an opportunity to come in at the bo om of the curve, in projects that are much more advanced than they were in 2009 or 2011, and the overall market dynamics are be er – supply and demand. The opportunity in the REE’s has really never been be er. SCMC: What do you think of the new Government of Canada ini a ves to set aside funding for research and development in the 2014 federal budget for rare earths? If cri cal rare earth metals (europium, terbium, dysprosium, y rium, and neodymium) are so important to the na on’s economy, why hasn’t the government played a stronger role in the industry before? CG: I think that there is a huge opportunity for Canada in suppor ng the development of REE projects in the country, and there is a huge market wai ng for such commodi es. In mee ngs with several Ministers of the former Quebec government, I was told that they had been informed by the current US administra on that it would be great if Quebec and Canada did more to support the development of what the US really needs, which are the commodi es that they depend on China for, and the REE’s were iden fied as the most important and strategic of all of these for the US. How this program works is s ll a li le unclear, but I think that it is a great ini a ve and I look forward to speaking to more people working on this in the future. The fact that it has not happened before is a separate issue, and I would rather compliment the current government for doing something that I think could be of significant value to, not just to a couple of REE projects, but to the country overall. I look forward to hopefully mee ng with Minister Joe Oliver on this. SECUTOR CAPITAL MANAGEMENT CORP 9
  10. 10. Commerce Resources Corp 31 January 2014 SCMC: Switching gears, Commerce also owns the Blue River Tantalum Project. What is the current state of the tantalum market? CG: There is a significant shor all of tantalum supply at this me, against stable or perhaps rising demand. Approximately 50% of SEC-compliant tantalum mines were shut-down over the last two years, even though the price for tantalum is 150% higher than it was before the Dodd-Frank bill was signed into law in July 2010. These mines shut-down because these projects are either not economic, they have exhausted their minerals, or the deposits have become too radioac ve. SCMC: Could you explain Sec on 1502 of the Dodd-Frank bill in regards to what is expected this coming year? Is it realis c? Do you think that firms will be able to comply? CG: Sec on 1502 is the name of the procurement report that the SEC requires every company with a US lis ng to file if it uses either tantalum, n, tungsten, or gold in its supply chain. The company must state where these materials are derived from in order to discourage firms from providing financial assistance to the bad actors in the Democra c Republic of the Congo (DRC), who are perpetra ng the world’s longest running and worst site of human rights abuses. The es mated body count for the conflicts that have occurred in the DRC since 1994 – the year that the Rwandan group that perpetrated the genocide in Rwanda was driven west into the DRC – is five million. This number does nothing to reflect the ongoing suffering and exploita on at the slave labor camps that are run by both the Rwandan Federa on Democra que de Libera on du Rwanda (FDLR), and the Congolese military (CDNP), and then the spin-off from the Congolese military named the M23 Rebels. In all, it is es mated that around 6,000 companies need to file Sec on 1502, and this includes every American manufacturer from Apple to Xerox and any foreign company that also has a US lis ng, including Sony, Samsung, Research in Mo on etc, etc. The expecta on is that all these required procurement reports are to be filed by May 31, 2014. This seems like it is realis c, but there is certainly some grumbling about it, although all legal challenges against it have failed up un l this point. In terms of the preparedness of companies to file, there have been many, many conferences held on this topic in the last year and I spoke at three of them myself. I think that these companies are taking this legisla on very seriously, mainly because they are concerned about the poten al brand damage that comes with being associated with the ongoing conflict and human rights abuses in the DRC. When I spoke at these conferences, I spoke about Commerce’s ownership of the largest produc on scenario for tantalum in the world at this me, and also the fact that we would be 100% compliant with the new US legisla on. SECUTOR CAPITAL MANAGEMENT CORP 10
  11. 11. Commerce Resources Corp 31 January 2014 SCMC: How does the Blue River Tantalum Project compare globally? CG: The Blue River tantalum project is the largest, cash posi ve tantalum produc on scenario in the world. It will be able to produce approximately 700,000 pounds of technical grade tantalum oxide and 6.3 million pounds of technical grade niobium oxide per annum for at least ten years. The Project also has excellent infrastructure in Bri sh Columbia. SCMC: What is tantalum used for and are there any subs tutes? CG: Tantalum is primarily used in capacitors that are found in everything electronic. Approximately 65% of the tantalum market is electronics. Although there are other materials that capacitors can be made of, there is no other material that has the capacitance, reliability, performance, or temperature range that tantalum has. Addi onally, there is nothing else that can be manufactured in such minute sizes. Tantalum’s second biggest usage is for ‘super alloys’. For example, all jet plane blades are manufactured from these ‘super alloys’ containing tantalum because it eliminates metal fa gue in the jet turbines. SCMC: Is it possible to be conflict-free today? CG: I would say that it is more difficult to be “conflict-free” today, simply because so many of the mines that would have produced the “conflict-free” material have shut down, and there has been no new produc on coming from anywhere outside of the DRC. The actual amount of legi mately “conflict free” material coming from the DRC – from the very admirable Solu ons for Hope Project in the southeast of the country – is very small. It is only 160,000 pounds per year out of an es mated global demand per annum of approximately five million pounds. Of course, anyone who chooses to joint venture with us and our Blue River Project would have a secure and stable supply of tantalum that is also compliant with the US legisla on, for a considerable period of me. SCMC: In closing, is there anything that you would like to add? CG: In terms of many of the ques ons you have asked today about our Ashram REE Project, I think that a recent independent research report by a German company, Rockstone, is quite good. SCMC: Thanks Chris SECUTOR CAPITAL MANAGEMENT CORP 11
  12. 12. Commerce Resources Corp 31 January 2014 The information contained in this report was obtained from sources we believe to be reliable at the time obtained but neither Secutor Capital Management Corp nor its employees, agents, or information suppliers can guarantee that such information is accurate or complete and it should not be relied on as such. Any opinions expressed herein reflect our judgement at this date and are subject to change. This commentary is based on information that is believed to be accurate at the time of writing and is subject to change. All opinions and estimates contained in this report constitute Secutor Capital Managment Corp’s judgement as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates, market conditions and other investment factors are subject to change. Past performance may not be repeated. Secutor Capital Management Corp and/or employees from time to time may hold shares, options or warrants on any issue included in this report and may buy or sell such securities. Secutor Capital Management does and seeks to do business with companies covered in its commentary. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This commentary is intended for use only in jurisdictions where Secutor Capital Management Corp is registered and is not to be construed as an offer or solicitation to buy or sell any security. Secutor Capital Management Corp accepts no liability whatsoever for any loss arising from any use or reliance on this commentary or the information contained herein. Any reproduction in whole or in part of this commentary without permission is prohibited. This commentary is furnished on the bases and understanding that neither Secutor Capital Management Corp nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. SECUTOR CAPITAL MANAGEMENT CORP 12

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