Haywood - BlueStone Resources Report

Kerry Smith, MBA, Peng, 416-507-2306, ksmith@haywood.com
Danny Ochoa, CFA, 416-507-2427, dochoa@haywood.com
For Important Disclaimers and Analyst Certification See Page 9
1
RESEARCH REPORT | January 30, 2019
CERRO BLANCO FEASIBILITY STUDY RESULTS ANNOUNCED
Bluestone Delivers a Robust Project with Room
for Improvement
OUR TAKE: While operating costs have increased relative to the 2017 PEA, Cerro Blanco continues
to be a robust project delivering a 34% IRR at a US$1,250/oz gold price. We look forward to continued
resource growth and project optimization to enhance project economics.
KEY HIGHLIGHTS
 Cerro Blanco delivers a 34% IRR at US$1,250/oz gold – Bluestone announced the results
of a Positive Feasibility Study for its 100% owned Cerro Blanco gold project located in
Guatemala. The FS highlights an underground operation with an 8-year mine life with
annual average production of 113,000 ounces at an average cash cost of US$424/oz and
AISC of US$579/oz. Initial capital is estimated at US$196 million and LOM sustaining
capex is estimated at US$140 million. At a gold price of US$1,250/oz the project returns
an NPV5% of US$241 million and an IRR of 34%.
 Room for Extending Mine Life – Compared to the 2017 PEA, the mine life has decreased
by 1 year, cash cost has increased by 14%, AISC has increased by 18%, and initial capital
costs have increased by 14.6%. While costs have increased across the board, the project
still delivers a robust return at a US$1,250/oz gold price and with 357,000 ounces of
Inferred resources that are currently not in the mine plan, we expect this project will at
a minimum be a 12-15-year mine life from resource conversion and incremental resource
additions with more drilling. The next steps will include developing a financing package
over the next 6-9 months (debt and equity expected) prior to construction start.
 Updating our Estimates – We have updated our estimates to be more in-line with results
of the feasibility study. Most notably, we have increased our throughput from 1,110 tpd
to 1,250 tpd, increased initial capital costs from US$175 million to US$220 million, and
increased life-of-mine sustaining capital costs from US$105 million to US$190 million. We
have also extended the mine life to 11 years given our expectation for reserve/resource
expansion. We have also updated our yearly G&A and exploration spend estimates. The
net effect is that our Corporate NAV increases slightly from $3.00 to $3.05/share. Our
Target Price, which continues to be based on a 0.9x multiple to NAV, remains unchanged
at $2.75/share.
RECOMMENDED ACTION
We recommend accumulating shares at current levels.
 Cerro Blanco is a high-grade underground gold project with considerable existing
infrastructure already in place. The project is fully-permitted and could be in production
within two years. The project is very robust and is a strong acquisition candidate for mid-
tier gold companies looking to add a shovel-ready, permitted project to their project
portfolio.
Price
Target
$3.25
VALUATION
Our $2.75 target is derived from a 0.9x
multiple to our net asset value (NAV), at a gold
price of US$1,400/oz.
Bluestone currently trades at US$39/oz of
gold (EV/oz) and 0.49x NAV, versus global
peers at US$45/oz and 0.48x NAV.
Bluestone Resources Inc.
(BSR-V)
SECTOR: Mining
CATALYSTS
1. H2/19 – Resource Update & Feasibility Study Update
2. H2/19 – Completion of a project financing package
3. 2020 – Construction/commissioning
4. Mid 2021 - Commercial production
STOCK PRICE $1.42
RATING BUY
TARGET PRICE $2.75
SCENARIO ANALYSIS
Downside
Scenario
Current
Price
Price
Target
$0.90 $1.42 $2.75
 37% 94%
KEY STATISTICS AND METRICS
52-Week High/Low $1.58/$1.05
YTD Performance 17%
Dividend Yield n/a
Shares O/S 64 M (basic)
Market Capitalization $91M
Cash $9M
Debt $0
Enterprise Value $81M
Daily Volume (3 mos.) 4,090
Currency C$ unless notes
HAYWOOD ESTIMATES (USD)
2020E 2021E 2022E
Revenue ($M) 0 111 210
Op. Cash Flow ($M) (14.1) 71.4 133.9
CFPS ($) (0.09) 0.45 0.85
FCF ($M) (166) 29 110
94%PROJECTED RETURN
Very HighRISK FACTOR

Bluestone Resources Inc. (BSR-V)
Danny Ochoa, CFA, 416-507-2427, dochoa@haywood.com 2
INVESTMENT THESIS
Bluestone acquired its flagship asset, Cerro Blanco, from Goldcorp in
May 2017, giving it 100% ownership of a high-grade (indicated resource
of 1.24 Moz Au at 10.2 g/t), permitted, underground gold mine that has
a considerable amount of infrastructure already in place. Previous
project owners have spent a total of US$170 million on the project, and
current on-site infrastructure includes two underground declines, three
kilometres of underground development, two alimak vent raises as well
as dewatering infrastructure and a water treatment facility.
The project is located just eight kilometres from the Pan American
Highway, and its favorable location and infrastructure help position it as
a low capital intensity project generating an internal rate of return at
the top of its development peer group. A Preliminary Economic
Assessment (PEA) led by JDS Energy & Mining was completed in
February 2017 highlighting a 1,250 tonne per day (tpd) underground
operation with average annual gold production of 105,000 ounces of
gold at an average cash cost of US$372/oz and all-in sustaining cost
(AISC) of US$490/oz over a nine-year mine life. Initial capital cost to
develop the project is estimated at US$170.8 million, and at a gold price
of US$1,250/oz, the PEA delivered an after-tax NPV5% of US$317
million and an IRR of 43.9%, with a 1.8-year payback. Bluestone is
working on a Feasibility Study, being led by JDS Engineering, which is
targeted for completion by year-end.
Despite the apparent higher political risk in Guatemala, we believe
Bluestone management is well experienced and able to effectively
manage this perceived higher risk. In-country personnel are
knowledgeable, have good government relationships, and the local
Mayor and townspeople are also supportive. We believe Bluestone
stands out from its peer group due to its high grade, high return
potential, and Cerro Blanco is fully permitted to production. With a
resource update expected to be released soon, followed by a Feasibility
Study by the end of the year, Bluestone should be a strong acquisition
candidate for mid-tier gold companies looking to add a shovel ready
high-margin deposit to their project portfolio.
SCENARIO ANALYSIS
Source: Capital IQ, and Haywood Securities
KEY RISKS
• Political: Cerro Blanco is in Guatemala which has a history of
political unrest, having suffered 36 years of armed conflict that
was resolved through a peace agreement in 1996. Renewed
political unrest, or a political crisis in Guatemala could adversely
affect Bluestone’s operations.
• Financial: The Company will require additional funds for
construction and development. Bluestone’s primary source of
funding will be a combination of debt and equity financing to
cover construction and commissioning costs.
• Forecast: Our valuation is derived solely from Bluestone’s Cerro
Blanco project, which is not in production. Our estimates are
based on our own assumptions, the 2019 Feasibility Study, and
analysis of comparable operations.
TARGET PRICE
Our $2.75 target is based on a 0.9x multiple to our net asset value
(NAV), at a gold price of US$1,400/oz.
DOWNSIDE CASE
Our downside case utilizes a gold price at a 20% discount to our
base case scenario (US$1,300/oz in 2019). At a US$1,040/oz gold
price and using a 0.6x NAV multiple, our target price drops to
$0.90/ share.
Bluestone is a TSX Venture Exchange listed company that is
focused on the development of its 100% owned Cerro Blanco gold
project in Guatemala.
Website
www.bluestoneresources.ca
Key Management
Darren Klink – CEO

3
Source: Bloomberg, Capital IQ, Company Reports, and Haywood Securities
Bluestone Resources Inc. (BSR-V,$1.42) Target Price (C$) $2.75 Basic Mkt. Cap, C$M $90.7
Rating: Buy Return (%) 94% Company CEO Darren Klinck
Risk: Very High 52 Week High/Low (C$) $1.58/$1.05 Website www.bluestoneresources.ca
Target Price Metric: 0.9x NAV Daily Volume (3-month avg) Shares Outstanding (million) 63.8
Fully Financed Shares (million) 157.5
Balance Sheet and Capitalization PRODUCTION AND CASH COSTS
US$M C$M
Market Capitalization $68 $91
Current Cash $7 $9
F/D Cash Adds $0 $0
Working Capital $7 $9
Debt $0 $0
Book Value $0 $0
Enterprise Value (EV) $61 $81
EV = Market Capitalization - Working Capital + Long-term Debt
Spot C$/US$ FX Rate: 1.327
CAPITAL STRUCTURE Shares
Millions
Shares Outstanding 63.8
Options 5.9
Warrants 5.2
Fully Diluted Shares 75.0
Recent M&A Activity
OWNERSHIP Shares O/S (mln) % O/S
Lundin Family Trust 23.1 36.2%
CD Capital 10.7 16.7%
Franklin 1.7 2.7% Future Financing Assumptions
AGF 1.33 2.1% Debt Raise - US$110 million during H1/19
John Robbins 3.75 5.9%
Other Management/Directors 2.0 3.1%
Recent Financings
FINANCIAL SUMMARY(US$mln) May 2017 - 5 for 1 share consolidation
Year-end December 31st 2017A 2018E 2019E 2020E 2021E 2022E May 2017 - C$80M, 53.3M subscription receipts at $1.50 convertible into 1 share
Shares Outstanding, mln 33.4 63.8 153.8 157.5 157.5 157.5
FD Shares, mln 33.4 75.0 164.9 161.5 162.1 163.7
EPS (0.15) (0.27) (0.09) (0.10) 0.33 0.63 Corporate NAV Summary and Sensitivity Spot
CFPS (0.27) (0.29) (0.09) (0.09) 0.45 0.85 Forecast Gold Price, US$/oz $1,305
P/CF - - - - 2.5x 1.3x C$/US$ FX Rate 1.254
Income Statement (US$mln) Cerro Blanco $105 $328 $476 $332
Revenue 0.0 0.0 0.0 0.0 110.8 209.9 Mita Geothermal $38 $38 $38 $38
Operating Expenses 0.0 0.0 0.0 0.0 31.2 52.1 Other Projects - - - -
Depreciation 0.0 0.0 0.0 0.0 15.8 30.0 Exploration Credit - - - -
General & Admin 2.6 5.0 13.5 13.5 7.5 7.5 Corporate Adjustments, C$ / F/D share $41 $41 $41 $41
Expensed Exploration 4.1 0.0 2.0 2.0 2.0 4.0 Corporate NAV, C$M $183 $406 $555 $410
Net Income (5.0) (20.2) (15.7) (15.7) 54.1 102.4 Corporate NAV, C$ / F/D share $1.16 $2.58 $3.52 $2.60
Balance Sheet (US$mln) Current Price / Corporate NAV 1.2x 0.6x 0.4x 0.5x
Cash & Equivalents 30.2 11.6 133.4 (31.7) (2.3) 107.6 Target Price / Corporate NAV 2.4x 1.1x 0.8x 1.1x
Debt 0.0 0.0 0.0 0.0 0.0 0.0 Target Price at 0.9x NAV $1.05 $2.35 $3.20 $2.20
Cash Flow (US$mln) Target Price at 1.0x NAV $1.15 $2.60 $3.50 $2.60
Op. CF (before W/C) (8.9) (18.6) (14.1) (14.1) 71.4 133.9 Target Price at 0.6x NAV $0.80 $1.65 $2.20 $1.65
Financing CF 0.0 0.0 188.0 1.0 0.0 0.0 Base case gold price assumption of US$1,300/oz in 2019 and US$1,400/oz thereafter.
Investing CF 0.0 0.0 (52.0) (152.0) (42.0) (24.0) Fully Financed Fully Diluted Shares, millions: 157.5
Change in Cash (7.8) (18.6) 121.9 (165.1) 29.4 109.9
COMPARABLES
PRODUCTION ESTIMATES Company Share MC EV R&R EV/oz NAV
2018E 2019E 2020E 2021E 2022E 2023E Cdn$ US$mln US$mln mln oz US$/AuEqoz US$/share
Gold (US$/oz) $1,270 $1,300 $1,400 $1,400 $1,400 $1,400 Harte Gold Corp. 0.39 174 209 1.5 142 0.89 0.35x
Exchange Rate (Cdn$/US$) 1.30 1.25 1.29 1.29 1.29 1.29 Orla Mining Ltd. 1.20 162 150 10.5 14 1.71 0.56x
Tonnes per Day (tpd) 1,250 1,250 1,250 1,250 1,250 1,250 Continental Gold Inc. 2.18 310 417 9.1 46 4.45 0.39x
Tonnes - - - 228 456 454 Midas Gold Corp. 0.96 170 157 6.6 24 1.27 0.61x
Grade (Au g/t) - - - 11.50 10.90 10.30 Sabina Gold & Silver Corp. 1.39 302 272 7.2 38 2.11 0.53x
Recovery (%) - - - 94.0% 94.0% 94.0% Lundin Gold Inc. 4.95 795 853 9.5 90 5.15 0.77x
Mining Cost (US$/t) - - - $124 $102 $102 IDM Mining Ltd. 0.06 23 21 0.6 32 0.18 0.27x
Gold Production, 000oz - - - 79 150 141 Orezone Gold Corporation 0.52 82 46 5.2 9 1.18 0.35x
Cash Costs, US$/oz - - - $320 $270 $285 West African Resources Limited 0.22 145 120 3.4 35 0.45 0.39x
AISC, US$/oz - - - $680 $515 $540 Equinox Gold Corp. 1.10 430 489 8.5 57 1.54 0.57x
Capex Spending, US$mln - $52 $152 $62 $44 $44 Belo Sun Mining Corp 0.35 111 83 6.8 12 0.55 0.50x
Selected Company Average 45 0.48x
RESERVES & RESOURCES Tonnes Grade Gold Bluestone Resources 1.42 80 61 1.6 39 2.32 0.49x
Cerro Blanco (as of Jan. 2019) (000) (g/t Au) (000 oz) Source: CapitalIQ
Company Reported P&P Reserves 3,444 8.50 940
Company Reported M&I Resources 274 10.1 261 Kerry Smith, P.Eng. - Research Analyst
Company Reported Inferred Resources 1,373 8.1 357 ksmith@haywood.com 416-507-2306
Total 5,091 9.5 1,558
Haywood Total Mineable Resources 4,715 8.3 1,259 11.0
$1,500
P/NAV
May 31, 2017 - Bluestone acquires Cerro Blanco project from Goldcorp for US$18M cash + US$2M deposit on Marlin Equipment. Transaction
included the Mita Geothermal project and ROFR on Marlin Mine equipment. Goldcorp retained a 1% NSR on Cerro Blanco.
Equity Issue - US$90 million during H2/19 (90.0 million shares at $1.25/sh)
-
$41
$481
$3.05
0.5x
0.9x
$2.75
$3.05
$38
-
Base Case
$402
$1,000 $1,300
$1.95
8
$0.00
$0.00 $0.00
$0.96 $1.27
$0.11 $0.15
$0.00
Mine Life
(years)
2
3
14
$0.00
$0.00
4,090
US$ / O/S Share C$ / O/S Share
$0.11 $0.15
$1.07 $1.42
$100
$200
$300
$400
$500
0
40
80
120
160
200
2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E
CashCosts(US$/oz)
Production(Koz)

4
Cerro Blanco Continues to Stand out
Bluestone announced the results of a Positive Feasibility Study for its Cerro Blanco gold project located in Guatemala. The study highlights
an underground operation with an 8-year mine life with annual average production of 113,000 ounces at an average cash cost of US$424/oz
and AISC of US$579/oz. For the first three years mill grade is over 10 g/t gold and production averages 146,000 ounces of gold with an
average of ~US$90 million per year in free cash flow, versus the current market capitalization for BSR of ~US$70 million. Initial capital cost
is estimated at US$196 million, and life-of-mine sustaining capex is estimated at US$140 million. At a gold price of US$1,250/oz the project
returns an NPV5% of US$241 million and an IRR of 34%. In our valuation, assuming a US$1,250/oz gold price, our project NPV5% works out
to US$235 million and an IRR of 24.4%. JDS Engineering led the Feasibility Study, assisted by Capuano Engineering (water and geothermal),
Hatch, Kirkham Geosystems and Stantec Inc., with additional oversight by Bluestone’s technical committee, which includes several very
experienced technical experts.
Compared to the 2017 PEA, the mine life has decreased by one year, cash cost has increased by 14%, AISC has increased by 18%, and initial
capital costs have increased by 14.6%. The increase in operating costs was primarily due to a higher ratio of cut and fill mining in this
Feasibility Study, along with proportionately less longhole mining. The PEA assumed 15% cut and fill and in this Feasibility, Bluestone has
assumed longhole mining is only used for veins dipping over 55 degrees – a very conservative assumption which pushed longhole to 55%
of the tonnes. In this feasibility study 55% is now longhole mining, 35% cut and fill and 10% of the ore comes from development. Operating
costs also increased as a result of additional dewatering requirements based on a much more detailed hydrogeologic model for the deposit.
Additionally, ventilation has been enhanced to ensure underground air quality and temperature are consistently managed. The
infrastructure necessary for this dewatering also contributed to the increase in capital costs and accounted for most of the increase in
capital versus the PEA.
While costs have increased across the board, the project still delivers a robust return at a US$1,250/oz gold price. The Feasibility study is
based on a maiden reserve estimate containing 940,000 ounces of gold at an average grade of 8.5 g/t gold. However, there are an additional
357,000 ounces of Inferred resources that are currently not in the mine plan and there is potential to increase mineralization through step-
out drilling along existing veins. We expect this project will at a minimum be a 12-15-year mine life from resource conversion and
incremental resource additions with more drilling.
Cerro Balance FS Highlights vs 2017 PEA and Haywood Estimates
Source: Bluestone Resources, Haywood Securities
Lead Consultant JDS JDS n/a n/a n/a -
Mineable, Mt 3.4 4.0 (14.0%) 4.0 4.0 - 4.0 16.7%
Mineable Gold Grade, g/t 8.50 8.14 4.4% 8.12 8.30 2.3% 8.30 (2.3%)
Contained Gold, koz 940 1,042 (9.8%) 957 1,183 23.6% 1,183 25.9%
Start-up 2021 H2/2021 n/a H2/2021
Mine Life, years 8.0 9.0 (11.1%) 9.0 11.0 22.2% 11.0 37.5%
Throughput, tpd 1,250 1,250 - 1,100 1,250 13.6% 1,250 (0.0%)
Gold Recovery, % 96.0% 91.0% 5.5% 91.3% 94.0% 3.0% 94.0% (2.1%)
Initial Capital Cost, US$M $196 $171 14.6% $175 $220 25.7% $220 12.2%
Sustaining Capital, US$M $140 $105 33.3% $105 $190 80.3% $190 35.7%
Mining Cost, US$/tonne processed $67.01 $49.06 36.6% $55.00 $55.00 - $55.00 (17.9%)
Processing Cost, US$/tonne milled $19.79 $26.26 (24.6%) $25.00 $25.00 - $25.00 26.3%
Site Services, US$/tonne milled $19.21 n/a
G&A Cost, US$/tonne processed $11.76 $17.26 (31.9%) $25.00 $23.40 (6.4%) $23.40 99.0%
Operating Cost, US$/tonne processed $117.78 $92.58 27.2% $105.00 $103.40 (1.5%) $130.40 (12.2%)
Total Cash Operating Cost, US$/oz $424 $372 14.0% $477 $427 (10.4%) $418 0.7%
All-In Sustaining Costs, US$/oz $579 $490 18.2% $636 $622 (2.2%) $613 7.4%
-
Annual Gold Production (000 oz) 113 105 7.6% 97 113 16.3% 113 (0.4%)
Recovered Gold (000 oz) 902 952 (5.3%) 957 1,183 23.6% 1,183 31.2%
Gold Price, US$/oz $1,250 $1,250 - $1,400 $1,400 - $1,250 12.0%
IRR (after tax), % 34.0% 43.8% (22.4%) 32.3% 30.4% (5.8%) 24.4% (10.6%)
NPV5% (after tax), % $241 $317 (24.0%) $282 $322 14.0% $235 33.6%
Payback, years 2.1 1.8 16.7% 2.5 2.5 - 2.5 19.0%
2017 PEA
(Feb. 2017)
2019 FS
(Jan. 2019)
FS vs PEA
Previous
Haywood
Estimates -
Base Case
Change
%
Assumptions
Current
Haywood
Estimates -
Base Case
Haywood Base
Case vs 2019 FS
Haywood
Estimates
at
US$1,250/oz

5
Opportunities for Improvement
Bluestone has identified opportunities to further enhance project economics and over the rest of 2019 Bluestone plans the following:
• Convert additional inferred resource to M&I through infill drilling
• Resource growth through step-out drilling on existing veins that continue outside of the current resource envelope
• Identification of new high-grade veins
• Further optimization of the mine plan
• Optimizing backfill assumptions
• Evaluating the use of ore sorting technologies
A drill program is currently underway with results to be incorporated in an updated resource estimate in Q3/19 followed by an updated
Feasibility Study likely in Q4. Bluestone also intends to finalize a financing package over the next 6-9 months and is still targeting production
in 2021. We expect the company will require financing in the short term which would carry them through late 2019 when the project
financing package should be finalized. With a 2019 budget of about US$16 million we anticipate a $10-$15 million funding (possibly some
form of mezzanine debt or equity) in the next 2-3 months to fund their ongoing work programs. Our valuation includes US$200 million of
total financing including US$100 million of debt and US$90 million of equity (90 million shares at $1.25/share) raised in late 2019 to fund
construction of Cerro Blanco.
Cerro Blanco Delivers First Quartile AISC
Source: Bluestone Resources, Company Reports, GFMS, Thomson Reuters

6
Valuation
We have updated our estimates to be more in-line with results of the feasibility study. Most notably, we have increased our throughput
from 1,110 tpd to 1,250 tpd, increased our gold recovery from 91% to 94% based on testwork showing improved recovery with atmospheric
pre-oxidation and a slightly finer grind, increased initial capital costs from US$175 million to US$220 million, and increased life-of-mine
sustaining capital costs from US$105 million to US$190 million. Given the potential for resource growth through infill drilling and step-out
drilling we have also extending the mine life from 9 years previously to 11 years, which compares to the 8-year mine life in the Feasibility
Study, which is based solely on current reserves. Resource expansion potential is very high in this gold system but takes a lot of drilling to
define and we fully expect over the longer term that our current mine life assumption will prove conservative. Average annual production
increased from 97,000 ounces per year, to 113,000 ounces per year and our average cash costs decreases from US$477/oz to US$427/oz.
The net effect of these changes is that our project NPV5% increased from US$282 million to US$322 million. We have also updated our
assumptions for yearly G&A, and 2019 exploration spend, and the Company’s current cash balance. The net effect is that our Corporate
NAV increases slightly from US$473 million to US$481 million, or from $3.00 to $3.05/share. Our Target Price, which continues to be based
on a 0.9x multiple to NAV, remains unchanged at $2.75/share.
Changes to Estimates
Source: Bluestone Resources, Haywood Securities
Lead Consultant JDS n/a n/a
Mineable, Mt 3.4 4.0 4.0 -
Mineable Gold Grade, g/t 8.50 8.12 8.30 2.3%
Contained Gold, koz 940 957 1,183 23.6%
Start-up 2021 H2/2021 n/a
Mine Life, years 8.0 9.0 11.0 22.2%
Throughput, tpd 1,250 1,100 1,250 13.6%
Gold Recovery, % 96.0% 91.3% 94.0% 3.0%
Initial Capital Cost, US$M $196 $175 $220 25.7%
Sustaining Capital, US$M $140 $105 $190 80.3%
Mining Cost, US$/tonne processed $67.01 $55.00 $55.00 -
Processing Cost, US$/tonne milled $19.79 $25.00 $25.00 -
Site Services, US$/tonne milled $19.21
G&A Cost, US$/tonne processed $11.76 $25.00 $23.40 (6.4%)
Operating Cost, US$/tonne processed $117.78 $105.00 $103.40 (1.5%)
Total Cash Operating Cost, US$/oz $424 $477 $427 (10.4%)
All-In Sustaining Costs, US$/oz $579 $636 $622 (2.2%)
Annual Gold Production (000 oz) 113 97 113 16.3%
Recovered Gold (000 oz) 902 957 1,183 23.6%
Gold Price, US$/oz $1,250 $1,400 $1,400 -
IRR (after tax), % 34.0% 32.3% 30.4% (5.8%)
NPV5% (after tax), % $241 $282 $322 14.0%
Payback, years 2.1 2.5 2.5 -
2019 FS
(Jan. 2019)
Previous
Haywood
Estimates -
Base Case
Change
%
Assumptions
Current
Haywood
Estimates -
Base Case

7
NAV and Target-Price Sensitivity to Gold Prices
Source: Haywood Securities
Peer-Group Comparables
Source: CapitalIQ
Recommended Action
We recommend accumulating shares at current levels
Bluestone is a high-grade underground gold project with considerable existing infrastructure already in place. The project is fully-permitted
and could be in production within two years. As the results of the Feasibility illustrate, the project is very robust, and is a strong acquisition
candidate for mid-tier gold companies looking to add a shovel-ready, permitted project to their project portfolio.
Forecast Gold Price, US$/oz $1,305
C$/US$ FX Rate 1.254
Cerro Blanco $109 $293 $416 $296
Mita Geothermal $38 $38 $38 $38
Other Projects - - - -
Exploration Credit - - - -
Corporate Adjustments, C$ / F/D share $41 $41 $41 $41
Corporate NAV, C$M $187 $372 $494 $375
Corporate NAV, C$ / F/D share $1.19 $2.36 $3.14 $2.38
Current Price / Corporate NAV 1.2x 0.6x 0.4x 0.6x
Target Price / Corporate NAV 2.3x 1.2x 0.9x 1.2x
Target Price at 0.9x NAV $1.10 $2.15 $2.85 $2.00
Base case gold price assumption of US$1,300/oz in 2019 and US$1,400/oz thereafter.
Fully Financed Fully Diluted Shares, millions: 157.5
$1,500
-
$41
$481
$3.05
0.5x
0.9x
$2.75
$3.05
$38
-
Base Case
$402
$1,000 $1,300
$1.95
Company Share MC EV R&R EV/oz NAV
Cdn$ US$mln US$mln mln oz US$/AuEqoz US$/share
Harte Gold Corp. 0.39 174 209 1.5 142 0.89 0.35x
Orla Mining Ltd. 1.19 161 149 10.5 14 1.71 0.56x
Continental Gold Inc. 1.80 256 363 9.1 40 4.45 0.32x
Midas Gold Corp. 0.96 170 157 6.6 24 1.27 0.61x
Sabina Gold & Silver Corp. 1.38 300 270 7.2 38 2.11 0.52x
Lundin Gold Inc. 4.82 775 833 9.5 88 5.16 0.75x
IDM Mining Ltd. 0.07 25 23 0.6 35 0.18 0.29x
Orezone Gold Corporation 0.54 86 49 5.2 9 1.18 0.37x
West African Resources Limited 0.22 146 120 3.4 35 0.45 0.39x
Equinox Gold Corp. 1.08 422 482 8.5 57 1.54 0.56x
Belo Sun Mining Corp 0.34 109 81 6.8 12 0.55 0.50x
Selected Company Average 45 0.47x
Bluestone Resources 1.40 79 60 1.6 39 2.33 0.48x
P/NAV

8
Significant Investment Risks
 Forecast Risk – Our valuation is derived solely from Bluestone’s Cerro Blanco project, which is not in production, but does have a
Preliminary Economic Assessment. Our estimates are based on our own assumptions, the 2019 Feasibility Study, and analysis of
comparable operations.
 Financial – Bluestone is an exploration company with no cash flow and is engaged in the capital-intensive exploration and development
business. The Company is funded to complete the Feasibility study but will require additional funds for construction and development.
In total, we estimate Bluestone will require approximately US$200 million to fund the initial development of the project, including
working capital, overrun facility, VAT taxes and other associated start-up costs. Financial Risk is high given the capital that will have to
be raised and the resultant equity dilution. Bluestone’s primary source of funding will be a combination of debt and equity financing
to cover construction and commissioning costs. Although we include financing assumptions in our valuation, the actual financing
parameters could be worse than we consider in our valuation, a possibility which would negatively impact our target price.
 Political – Cerro Blanco is in Guatemala which has a history of political unrest, having suffered 36 years of armed conflict that was
resolved through a peace agreement in 1996. Renewed political unrest, or a political crisis in Guatemala could adversely affect
Bluestone’s operations. The 2016 Fraser Institute’s Global Survey ranked Guatemala as 88th out of 104 jurisdictions in its Investment
Attractiveness Index, and 89th out of 104 jurisdictions in the Policy Perception Index. The Cerro Blanco project is permitted for
construction and production. Tahoe (THO-T, Tender, $4.00 Target) has suffered numerous setbacks in Guatemala at its Escobal mine,
and although these issues are specific to Escobal, they have reduced the investment appeal of Guatemala.
 Valuation – Our valuation assumptions are based on comparison with similar operating projects, discussions with management, and
Haywood’s commodity price deck. As for any gold company, Bluestone is exposed to commodity risk. Operating assumptions used in
our valuation are in line with similar projects.

9
Important Information and Legal Disclaimers
This report may be distributed in the following states: nil. Otherwise, this report may only be distributed into those states with an
institutional buyer state securities registration exemption.
Analyst Certification
I, Kerry Smith, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the
analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part
of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Important Disclosures
Of the companies included in the report the following Important Disclosures apply:
Ticker Company 1 2 3 4 5 6 7 8
TSXV:BSR Bluestone Resources Inc. X X X X
TSXV:EQX Equinox Gold Corp. X X X X
TSX:HRT Harte Gold Corp. X X
TSX:LUG Lundin Gold Inc. X
TSX:MAX Midas Gold Corp. X X
TSX:SBB Sabina Gold and Silver Corp. X X
TSX:THO Tahoe Resources Inc. X
1
The Analyst(s) preparing this report (or a member of the Analysts’ households) have a financial interest in this
company.
2
As of the end of the month immediately preceding this publication either Haywood Securities, Inc., one of its
subsidiaries, its officers or directors beneficially owned 1% or more of this company.
3
Haywood Securities, Inc. has reviewed lead projects of this company and a portion of the expenses for this travel
have been reimbursed by the issuer.
4
Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a
public offering of securities for this company in the past 12 months.
5
Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking services from
this company in the past 12 months
6
Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking services from
this company in the past 24 months
7 Haywood Securities, Inc. or one of its subsidiaries is restricted on this company at the time of publication
8
Haywood Securities, Inc. or one of its subsidiaries expects to receive or intends to seek compensation for investment
banking services from this company in the next three months
Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to
know at the time of publication or at the time of public appearance:
 n/a
Distribution of Ratings (as of January 30, 2019)
IB Clients
% # (TTM)
Buy 74.7% 71 96.0%
Hold 11.6% 11 4.0%
Sell 1.1% 1 0.0%
Tender 2.1% 2 0.0%
UR (Buy) 0.0% 0 0.0%
UR (Hold) 0.0% 0 0.0%
UR (Sell) 0.0% 0 0.0%
Dropped (TTM) 10.5% 10 0.0%

10
Price Chart, Rating and Target Price History (as of January 30, 2019)
B: Buy; H: Hold; S: Sell; T: Tender; UR: Under Review
Source: Capital IQ and Haywood Securities
Link to Research Policy: http://haywood.com/what-we-offer/research/research-policy
Member of the Canadian Investor Protection Fund
Bluestone Resources Inc. (BSR-V) Date Target(C$) Rating
6/26/18 $2.75 Buy
Initiated Coverage: 6/26/2018
0
0.5
1
1.5
2
2.5
3
Feb
16
May
16
Aug
16
Nov
16
Feb
17
May
17
Aug
17
Nov
17
Feb
18
May
18
Aug
18
Nov
18
Price History (C$) Target/Rating/Coverage Change
Tahoe Resources Inc. (THO-T) Date Target(C$) Rating
11/14/18 $4.00 Tender
11/7/18 $4.00 Sell
9/4/18 $4.50 Sell
3/9/18 $5.50 Sell
2/23/18 $5.50 Hold
1/15/18 $7.00 Hold
10/17/17 $7.25 Hold
9/11/17 $7.75 Hold
8/9/17 $6.75 Hold
7/19/17 $7.25 Hold
7/6/17 $9.00 Sell
5/3/17 $13.00 Hold
3/13/17 $12.00 Hold
1/25/17 $14.00 Hold
11/4/16 $25.00 Buy
8/11/16 $28.00 Buy
7/11/16 $25.00 Buy
5/9/16 $20.00 Buy
Initiated Coverage 11/05/13
0
5
10
15
20
25
30
Feb
16
May
16
Aug
16
Nov
16
Feb
17
May
17
Aug
17
Nov
17
Feb
18
May
18
Aug
18
Nov
18
Price History (C$) Target/Rating/Coverage Change

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