(PG:TSX) Transitioning From Explorer To Mine Developer March 26, 2013 Michael Curran, CFA (416) 507-3950 mcurran@beaconsecurities.ca We are initiating coverage of Premier Gold Mines with a Buy rating and a 12-month target price of $6.00/share. In summary, our recommendation is based on the following: Low Political Risk Assets: Premier s exploration portfolio has exposure to Ontario and Nevada in our view, two of the most mining-friendly jurisdictions in the world. High-Grade Component To Deposits: In Red Lake and Nevada, exploration is focused on the search for, and delineation of, higher-grade gold mineralization (>10g/t). At Trans-Canada (Ontario), the 7.7 million ounce gold resource includes a component of high-grade mineralization in both the open pit and underground resources. Well-Funded: Premier holds over $140 million of cash and securities (roughly $1/sh), which we consider to be more than sufficient to fund the $30 million of planned exploration this year, and take one or more projects to a production decision (in 2014 or 2015). Initiating Coverage BUY $6.00 Previous Close $2.95 12-month Target Price $6.00 Potential Return 103.4% Dividend Yield 0.0% 52 Week Price Range $2.49-$6.79 Estimates (C$M, except per unit) 2011A 2012E 2013E 2014E Revenue $0.0 $1.9 $0.0 $0.0 Net income -$16.7 -$18.4 -$11.0 -$11.0 Shares O/S, wgt. avg. 112 137 150 195 EPS (operating) -$0.07 -$0.09 -$0.05 -$0.05 CFPS -$0.04 -$0.06 -$0.05 -$0.05 Valuation P/E n/a n/a n/a n/a P/CF n/a n/a n/a n/a NAV $6.13 P/NAV 0.5x Financials Shares Outstanding Mgt/Insiders 5% 148.9 million (C$M) Market Cap (Millions) $439.3 LT Debt (corporate) $5.0 Working Capital $138.9 Enterprise Value (Millions) $305.3 Fiscal Year End December 31 Reserves / Resources 2P Reserves - M+I Resources Total Resources (M+I+I) Quarterly Estimates 4.1 Moz 8.0 Moz Q1/12 Q2/12 Q3/12 Q4/12e EPS (operating) -$0.02 -$0.04 -$0.02 -$0.01 CFPS -$0.02 -$0.01 -$0.02 -$0.01 Q1/13e Q2/13e Q3/13e Q4/13e EPS (operating) -$0.01 -$0.01 -$0.01 -$0.01 CFPS -$0.01 -$0.01 -$0.01 -$0.01 Company at a Glance Premier Gold Mines is a North American focused exploration and development company with multiple gold projects located in the heart of proven mining districts in North America (Archean greenstone belts of Ontario and the prolifi Battle Mountain and Carlin Trends of Nevada). All prices in C$ unless otherwise indicated. Transitioning To Development: Premier Gold has added significant mining expertise to its senior management group, and can now boast a technical team that rivals many mid-sized gold producers, in our view. Initial focus will centre on the development plan for Trans-Canada (Ontario), but may also include underground activity at Cove (Nevada) later in 2013 or 2014. Stock Performance 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Premier Gold Mines Ltd. (PG-CA) Volume (Millions) Price (CAD) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 7 6.5 6 5.5 5 4.5 4 3.5 3 2.5 2 Volume Premier Gold Mines Ltd. Average Volume - PG-CA Source: FactSet Prices Beacon Securities Ltd. 66 Wellington Street West Suite 4050, Toronto, Ontario, M5K 1H1 416.423.1260 www.beaconsecurities.ca
Investment Thesis We view Premier Gold Mines as an attractive investment for both exploration success and the transition from explorer to developer/producer. While some projects remain early-staged, we see potential for re-rating of Premier Gold shares as the company delineates higher-grade resources and outlines a timeline to production at one or more of the properties. Strategic Land Positions in both Red Lake and Nevada, wherein senior gold producers such as Goldcorp and Newmont are likely to be interested (to partner, process, or purchase) due to exploration success and positive economic analysis. High-Grade Exposure The Red Lake JV, Cove, and South Carlin properties are all prospective targets for higher-grade gold mineralization (+10g/t), with potential for significant deposit size (+1Moz). While resource definition is not expected at Red Lake in 2013, we are expecting a significant increase in gold resources at Cove later this year. Strong Financial Position Premier has over $140 million in cash and liquid securities, more than sufficient to fund the $30 million of exploration spending planned for 2013. Remaining funds should be adequate to advance exploration activities at all of the company s project for the next few years, including underground development, and feasibility studies. As a result, we do not expect Premier Gold to require further funding until a positive production decision is taken for one of its projects (2014 or 2015). Emerging Producer With a 7.7 million ounce resource at Trans-Canada, Premier now has a primary project to advance towards production. We expect the upcoming economic study to outline a robust open pit and underground mine capable of producing +200Koz/yr. Growing Technical Team Over the past few quarters, Premier has added several new members to its senior management group and Board, all with extensive experience in the design, construction oversight, and operation of both open pit and underground mines. March 26, 2013 Page 1
Valuation Methodology Our favored valuation method for precious metals producers is a price-tonet-asset-value (P/NAV) multiple based on a discounted cash flow (DCF) model constructed using our estimates of the parameters of existing or potential mining operations. We employ a US$1,500/oz long-term gold price assumption (and provide sensitivity analysis at higher and lower forecasts). Future year cash flows are then discounted using a base rate of 5%, to which a risk premium is added, depending on the overall political risk the company s assets are exposed to. We do not have separate risk adjustments for each individual country, instead classifying our risk premiums as 2.0% (low - most of the Americas, Australia), 5.0% (medium - Eastern Europe, Turkey, etc.), or 7.0% (high - South Africa, Russia/Stans). Premier Gold s North American assets are considered low risk (5% base + 2% premium). For earlier-staged projects where a feasibility study has not yet been completed (such as Trans-Canada), we employ a further 2% premium (i.e. 7% + 2% = 9%) for valuation purposes. However, for projects without reported resources that DCF modeling would prove difficult, we employ the more basic valuation metric of Adjusted Market Capitalization per total resource ounce (AMC/oz). For Premier Gold, this includes the Red Lake JV, Cove, and South Carlin projects. Fig 1 Peer Group of Explorers: AMC/oz (M+I) (M+I+I) Share Shares Market Measured Total Gold AMC/ AMC/ Sym- Price O/S Cap AMC Indicated Resource Grade M+I oz M+I+I oz Area of Company Exch C$/sh MM US$MM US$MM 000 oz 000 oz g/t US$/oz US$/oz Major Exploration Rainy River RR-T 2.78 100 $278 $207 6,167 8,447 1.09 34 24 Ontario Romarco R-T 0.82 585 $480 $402 4,039 4,840 1.68 99 83 South Carolina Rubicon RMX-T 2.53 288 $730 $519 0 3,057 17.29-170 Ontario Torex Gold TXG-T 1.73 606 $1,049 $649 4,824 5,444 2.70 135 119 Mexico 89 99 Premier Gold - current PG-T 2.95 149 $441 $301 4,118 8,003 3.49 73 38 Ontario/Nevada, Factset share data For Premier Gold, we assume any high-grade ounces delineated at the Red Lake JV, Cove, and Saddle properties can achieve a similar AMC/oz multiple to the peer group above, and therefore we have assigned a target AMC/oz multiple of $100/oz. March 26, 2013 Page 2
Fig 2 Net Asset Value Breakdown: Premier Gold Mines Discount Rate Ownership Value Per Share (C$/sh) (%) (%) C$M 2013E 2014E 2015E Trans-Canada (Ontario) 9.0% 100% $531 $3.56 $3.56 $3.56 Operating assets $531 $3.56 $3.56 $3.56 Target Resource (Moz) Red Lake JV (ON) 2.00 49% $98 $0.66 $0.66 $0.66 Cove (Nevada) 1.00 100% $100 $0.67 $0.67 $0.67 South Carlin (Nevada) 0.50 100% $50 $0.34 $0.34 $0.34 Sandstorm shares $56 $0.37 $0.28 $0.28 Working Capital $83 $0.56 $0.53 $0.47 LT Debt (corporate only) ($5) ($0.03) ($0.01) ($0.01) Corporate assets $382 $2.57 $2.46 $2.40 NET ASSET VALUE $913 $6.13 $6.02 $5.97 Source: Beacon Securities estimates In Fig. 2 we provide forward-looking NAV/sh estimates to show how the company s NAV is forecast to change over the next few years. Using a target P/NAV multiple of 1.0x on our 2013 NAV estimate of $6.13 for Premier Gold suggests a fair value of $6.00/sh. Fig 3 Net Asset Value Sensitivity LT Gold Price (US$/oz) $1,000 $1,250 $1,500 $1,750 $2,000 5% $3.54 $5.77 $8.00 $10.85 $12.45 Discount 7% $3.24 $5.06 $6.93 $8.78 $10.62 Rate 9% $3.02 $4.56 $6.13 $7.64 $9.18 11% $2.85 $4.15 $5.45 $6.75 $8.05 Source: Beacon Securities estimates March 26, 2013 Page 3
Company Description Ontario Properties Trans-Canada The 100%-owned Trans-Canada Property is located in northern Ontario approximately 200km northeast of Thunder Bay. It consists of several claim groups/projects with a cumulative strike length of more than 50km located along, or in close proximity to the Trans-Canada Highway between the towns of Geraldton and Beardmore. Several past producing underground gold mines are present on the claim block (operated mainly during the period 1930-1950), with full mining activity shuttered by 1970. Gold deposits in the Geraldton area are typical of Archean epigenetic hydrothermal deposits normally considered to be mesothermal lode gold deposits. The gold mineralization is primarily located in areas of high strain and deformation with brittle structures providing a pathway, and also hosting mineralization as veins or replacement zones with associated alteration. Fig 4 Property Location Map: Trans-Canada Source: Company website The Hardrock deposit is the largest gold deposit within the Trans-Canada Property. It is located 3km south of the town of Geraldton. Near surface gold resources have been identified where historic gold mining projected to surface, and additional underground resources are comprised of extensions of previously mined zones and recently discovered parallel zones of gold mineralization. Brookbank is located 77km to the west of Hardrock along the Trans- Canada highway and has the potential to be evaluated as a stand-alone project utilizing the existing Northern Empire Mill (~200tpd), or as a satellite deposit to a new and larger processing facility at Hardrock. The Kailey deposit is located 2.5km north of Hardrock and is comprised of shallow, widely disseminated mineralization proximal to the historic Little Long Lac gold mine. Key Lake is located 11km to the west of Hardrock. March 26, 2013 Page 4
Gold Resources (Moz) Premier Gold Mines Fig 5 Gold Resources: Premier Gold Mines Gold Contained Gold Contained Tonnage Grade Gold Tonnage Grade Gold Hardrock (tonnes) (g/t) (000oz) Kailey (tonnes) (g/t) (000oz) O/P M+I 46.6 1.5 2,261 O/P M+I 8.6 1.0 265 Inferred 6.6 1.7 370 Inferred 3.7 1.0 115 53.2 1.5 2,631 12.3 1.0 380 U/G M+I 5.0 5.5 889 U/G M+I 0.0 0.0 0 Inferred 16.0 5.9 3,040 Inferred 0.0 0.0 0 21.0 5.8 3,929 0.0 0.0 0 Total M+I 51.6 1.9 3,150 Total M+I 8.6 1.0 265 Inferred 22.6 4.7 3,410 Inferred 3.7 1.0 115 74.2 2.7 6,560 12.3 1.0 380 Brookbank Key Lake O/P M+I 2.64 2.0 171 O/P M+I 2.6 1.2 97 Inferred 0.2 2.4 13 Inferred 1.3 1.3 56 2.8 2.0 184 3.9 1.2 153 U/G M+I 1.9 7.2 429 U/G M+I 0.0 6.5 6 Inferred 0.4 4.0 53 Inferred 0.1 3.6 7 2.3 6.6 482 0.1 4.5 13 Total M+I 4.5 4.2 600 Total M+I 2.6 1.2 103 Inferred 0.6 3.5 66 Inferred 1.4 1.4 63 5.1 4.1 666 4.0 1.3 166 all TC M+I 67.4 2.0 4,118 Cove M+I (Ontario) Inferred 28.3 4.1 3,654 (Nevada) Inferred 0.4 20.3 231 95.7 2.6 7,772 0.4 20.3 231 PG-all 8,003 Fig 6 Resource Growth: Trans-Canada Project 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Other Hardrock MAR-10 APR-11 DEC-12 March 26, 2013 Page 5
Fig 7 Hardrock Cross-Section: Open Pit vs. Underground Resources Fig 8 Hardrock DCF Model Parameters: Open Pit and Underground Mine Mining rate - tpd 15,000 Mining rate - Mtpa 5.5 Mined grade - O/P 1.15 Mined grade - U/G 5.00 Gold recovery 92% Gold Production - annual 235,000 Gold Production - LOM 3,288,979 Capex - $M 375 Total Cash Costs - US$/oz 712 Start-up date mid-2016 IRR @US$1,500 LT gold 16% Source: Beacon Securities estimates 2013 Exploration Plans Premier s new technical team is reviewing the operating plan for the development of the Trans-Canada project. At Hardrock, the previous plans for a small open pit and primarily underground mine look to be shifting towards a larger open pit, followed by underground development. In October 2012, the company received environmental permits that would allow dewatering of the historic MacLeod-Mosher mine. Depending on the development plan for Hardrock (amount of open pit versus underground), we could see Premier begin dewatering activity sometime during H2/13. At Brookbank, an optimization study is assessing whether to employ the existing Northern Empire mill (200tpd) or truck Brookbank ores to a larger central mill at Hardrock. Exploration and delineation drilling will continue. Our modeling of Trans-Canada does not currently include any contribution from Brookbank. March 26, 2013 Page 6
Red Lake JVs The Rahill-Bonanza JV (Premier-49%, Goldcorp-51%) is strategically located in the heart of the main Red Lake "Mine Trend" between Goldcorp s Red Lake Gold Mines complex to the east, and the Cochenour/Bruce Channel project to the west. The JV property, covering some 4.5km of the highly prospective mine trend, is being explored from both surface and underground by Goldcorp (JV operator). The East Bay JV (Premier-35%, Goldcorp-65%) is a second block of claims located along the northern arm of the Red Lake trend, north of the F2 Zone (Phoenix property) of Rubicon Minerals. Fig 9 Property Location Map: Rahill-Bonanza JV Future Goldcorp mines Existing Goldcorp mines One of the more exciting new exploration efforts in the Red Lake camp is the underground tram currently being excavated one mile below surface, which will link the Bruce Channel and Cochenor deposits in the west to Goldcorp s existing mine and mill complex in the east. While the purpose of the tram is primarily to deliver ore to the mill complex, the tram will also provide a permanent platform for exploration of the main mine trend. With the tram crossing several kilometres of the Rahill-Bonanza JV ground, we see above average potential to deliver new high-grade gold discoveries in the Red Lake area. March 26, 2013 Page 7
Fig 10 Property Long Section: Red Lake Mine Trend Goldcorp PG/Goldcorp JV 7.3km Goldcorp planned completed tram Fig 11 Drill Results: Red Lake JV Gold Gold Grade Interval Grade Interval Zone Hole (g/t) (m) Zone Hole (g/t) (m) Wilmar 2E PG10071 23.7 2.0 East Bay EBJV11174 51.0 0.7 " PG10075 124.3 1.5 " EBJV11176 297.6 1.0 " PG10076 32.4 1.0 " EBJV11178 22.4 1.0 " PG10082 68.9 3.5 " EBJV11179 44.8 1.5 " PG10090 46.2 4.5 " EBJV11183 16.0 0.7 " PG10090 42.6 1.5 " EBJV11185 35.5 0.8 " PG11100 60.0 2.6 " EBJV11185 20.5 0.7 " PG11102 15.1 2.0 2013 Workplan The haulage drift (tram) being constructed by Goldcorp to connect the existing operations to the east and the planned future operations to the west is expected to be completed during 2013, and provide a prime underground exploration platform to conduct a long-term exploration program to test this largely unexplored part of the Red Lake camp. The initial phase of exploration from the haulage level is comprised of 1500m-long horizontal drill holes on 120m centres along the tram, primarily to delineate the geology and seek out favorable structures, contacts, and alteration that may host high-grade gold mineralization. In late February 2013, Premier announced plans to acquire the Broulan Reef project, located to the west of the Rahill-Bonanza JV ground (see Fig.12). Subsequently, Goldcorp agreed to fund its pro-rata share (51%) of the transaction, and the Broulan Reef property will therefore be rolled into the existing Rahill-Bonanza JV. March 26, 2013 Page 8
Fig 12 Recent Property Purchase: Broulan Reef Nevada Properties Over the past few years, Premier Gold has expanded its Ontario property portfolio with additions in Nevada, one of the more active mining jurisdictions in the USA. First the South Carlin (Saddle) project was acquired in 2010, and then the Cove project in 2012. Fig 13 Property Location Map: Nevada March 26, 2013 Page 9 Cove (Eureka-Battle Mountain Trend) The Cove Gold Project is located roughly 22km south of Newmont's Phoenix Mine, in north-central Nevada, some 50km south-west of the town of Battle Mountain. The property consists of 389 leased unpatented claims, 439 wholly-owned unpatented claims, and 7 leased patented claims. Production began from the Cove Mine in 1988 and continued until 2001 from open pit and some limited underground mining, with total output of 2.6Moz of gold and 100Moz of silver. Premier acquired the property from Victoria Gold (VIT-TSXv, not rated) in June 2012. The purchase price was $8 million on closing and a further $20 million in future payments linked to production ($5M payment once 0.25, 0.5, 0.75, and 1Moz production milestones are achieved).
Newmont Mining controls back-in rights related to the property (triggered with the tabling of a positive feasibility study containing at least 500Koz of gold, Newmont can back-in for 51% of the project by repaying 250% of incurred expenditures since March 2006). Premier Gold was attracted to the project after the discovery by Victoria Gold of the Helen s Zone (Upper and Lower), located to the west of the historical open pit. This high-grade zone (Victoria Gold outlined a resource of 230Koz grading over 20g/t gold) is hosted in a unit unrelated to the open pit mineralization, and PG s geologists believe the new zones have potential to be extended towards, and perhaps below, the existing open pit, as well as occur elsewhere on the land package. Drilling to date by Premier has extended the Helen zone over 200 metres southeast (and we expect to have materially increased the drill-indicated resource). Fig 14 Plan and Cross-Section: Cove Deposit Recent drill results include: 16.0 metres grading 9.2g/t gold 3.5 metres grading 33.4g/t gold 7.6 metres grading 7.2g/t gold 20.4 metres grading 11.8g/t gold 24.4 metres grading 7.1g/t gold 2013 Plans Premier has one drill active on the property, as it awaits approval of its Plan of Operation, which would allow for more aggressive exploration activity later this year (additional drills, surface disturbance, perhaps even underground development). March 26, 2013 Page 10
South Carlin (Carlin Trend) The South Carlin project is located in western Elko County, about 22km by road south of Carlin, Nevada. Access is via an all-weather gravel road maintained year-round by Newmont and Premier. Premier currently owns the mineral rights to 12 sections, four of which are leased to Newmont and two of which are leased to US Gold by previous agreements. The South Carlin project includes the Saddle property, which hosts the northwest extension of the past-producing Rain Mine, an open pit and underground mine operated by Newmont Mining. Fig 15 Property Location Map: Saddle Project In early 2012, Premier Gold and Newmont announced a letter of intent to enter into a joint venture that would have consolidated the Saddle and Rain properties, with each party contributing lands, and Premier Gold acquiring a 55% operating interest (after relinquishing its 1.5% nsr on Newmont s Emigrant Springs mine and spending an initial US$20 million in development expenditures). However, this transaction was not completed, and the prior terms can no longer be fully met, as Premier Gold has since spun out its royalty interests into Premier Royalty Corporation late in 2012, and subsequently sold its shares early in 2013. As a result, new terms would likely need to be negotiated in order to complete a JV. At this point, we expect Premier Gold to focus its Nevada exploration efforts at Cove, before revisiting Saddle/Rain at a later date. March 26, 2013 Page 11
Investment Risks Commodity Prices For mining operations, profitability and cashflow are materially dependent on the realized prices for the commodities produced. In the case of nonproducers, the most important factor to economic viability is the assumption of future commodity prices. Geological As an early-staged explorer, there is no guarantee that Premier Gold s project portfolio will transition into economic mining operations. Even should exploration projects transition into mining operations, geological risk will remain, relating to how the actual mining results (grade, tonnage, recovery, etc.) compare to forecasted rates. Political Premier Gold s main assets are located in Ontario and Nevada. We consider both to be among one of the lower risk jurisdictions for mining in the world, with a well-established legal framework (property title/ownership and general business environment), and a stable royalty/tax structure. Financial Non-producing companies tend to require periodic financings to continue exploration/development efforts. Typically only equity financing is available, leading to existing shareholder dilution. However, we view this risk as significantly lower for Premier Gold, as it recently was able to secure non-dilutive financing through the sale of its royalty interests and a secondary financing, bringing over $130 million in cash and liquid securities to its coffers. Other At the Cove property (Nevada), Newmont Mining holds back-in rights that would allow it to acquire 51% of the project. On a positive note, the trigger point of a positive feasibility study on at least 500Koz is more than double the current resource, and Newmont would have to reimburse Premier Gold with 250% of all exploration expenses incurred since 2006. March 26, 2013 Page 12
Summary/Conclusions Premier Gold has a portfolio of projects in two of the better mining jurisdictions we see globally, in Ontario and Nevada. Future development potential for the company s projects should also benefit from being hosted in brownfield locations (where historical mining has occurred). We also consider Premier Gold s portfolio to have a good balance of early-staged (Red Lake JV and Cove) and advanced development projects (Trans-Canada), where we believe share price appreciation can be realized in the short-term with either early-staged exploration results, or achieving milestones towards mine development (resource updates, economic studies, etc.). With an ample treasury of cash and liquid investments (in excess of $140 million), we are confident that further share dilution is unlikely until a production decision is made on one of the company s projects (in 2014 or 2015), and that funds on hand are sufficient for all necessary drilling, underground development, and feasibility work (engineering, metallurgical testwork, etc.) over the next few years. One of the qualitative attributes of Premier Gold we would highlight to investors are recent management additions to senior management and the Board of Directors over the past 18 months, which have added extensive mine development and operating experience to the PG team. We now consider Premier Gold to have access to a technical team that would rival many mid-tier gold producers. Our valuation of Premier Gold s assets, a combination of DCF modeling for a potential open pit and underground mine at Hardrock, and AMC/ozbased assessments of the resource potential of the other properties, suggest that PG shares are trading at a P/NAV multiple of just under 0.5x. With a +100% return to our $6.00 target price, we are initiating coverage of Premier Gold Mines with a Buy rating. March 26, 2013 Page 13
Appendix A: Management / Directors Ewan Downie: President, CEO, and Director Mr. Downie has over 25 years of experience in the exploration and mining industry and is a founder of Premier Gold. Ebe Scherkus: Chairman and Director Mr. Scherkus is a mining engineer who brings 37 years of mineral exploration and mine development experience, most recently as President and COO of Agnico- Eagle Mines. He joined Premier Gold in May 2012. Stephen McGibbon: Executive VP Corporate and Project Development Stephen McGibbon is a Professional Geologist with over 28 years of exploration, mine production and management experience. From 1994 until 2006, Stephen served as both Chief Geologist and Exploration Manager for Goldcorp, at its flagship Red Lake Mine operation. He joined Premier Gold in August 2006. Eric Lamontagne: Manager Development Projects Mr. Lamontagne is a mining engineer with 14 years experience, most recently as Project Manager for Agnico-Eagle Mines, working on both the Meadowbank and Meliadine projects in Nunavut. Eric also worked with Inmet Mining. He joined Premier Gold in January 2013. Paul-Henry Girard: Senior Mining Advisor Mr. Girard is a mining engineer with over 30 years experience, most recently VP- Canada for Agnico-Eagle Mines. He joined Premier Gold in December 2012. Steve Filipovic: CFO Mr. Filipovic is a Chartered Accountant with 11 years experience in the mining industry. Steve has been with the company since its inception in 2006. Brian Morris: VP-Exploration Mr. Morris brings over 23 years experience in the mining industry, His background includes senior management experience with Hecla, Barrick, and Newmont. Brian served as VP and GM of Rio Grande Silver (a Hecla subsidiary) prior to joining Premier Gold in October 2011. Paul Blatter: Director of Metallurgy Mr. Blatter brings over 13 years of experience in mine development process and metallurgy, including work with Agnico-Eagle Mines and Matamec Explorations. He joined Premier Gold in mid-march 2013. Claude Lemasson: Director Mr. Lemasson is a professional engineer with over 20 years of mining development experience. Claude was previously the President and COO of Guyana Goldfields, and has held senior management positions with Goldcorp. He joined the Board in May 2012. John Begeman: Director Mr. Begeman is a mining engineer with over 35 years of mining experience. He currently sits on the boards of Yamana Gold and Endeavour Mining. He has previously served as President and CEO of Avion Gold, COO of Zinifex Canada, and VP-Western Operations for Goldcorp. March 26, 2013 Page 14
Appendix B: Summary Financials Premier Gold Mines Beacon Securities Limited Symbol PG-TSX Last Share Price $2.95 Stock Rating BUY Shares Outstanding 148.9 Price Target $6.00 Market Capz'n ($M) 439 Michael Curran, CFA (416) 507-3950 All C$ unless noted For Fiscal Year Ended Dec 31 INCOME STATEMENT 2011 2012E 2013E 2014E RATIO ANALYSIS 2011 2012E 2013E 2014E Revenues $M - 1.9 - - Dividend Paid $/sh $0.00 $0.00 $0.00 $0.00 Operating Costs $M - - - - Dividend Yield % 0.0% 0.0% 0.0% 0.0% EBITDA $M (14.5) (14.2) (11.0) (11.0) LTD/(Total Cap) % 2.9% 1.7% 1.3% 0.5% DD&A $M - - - - EV / EBITDA EBIT $M (14.5) (14.2) (11.0) (11.0) PRICES/EXCHANGE RATES 2011 2012 2013E 2014E Interest Expense $M 0.5 0.7 - - Gold Price US$/oz 1,572 1,675 1,650 1,700 EBT $M (4.9) (7.5) (8.0) (9.0) Silver Price US$/oz 35.32 31.50 30.00 30.00 Non-Recurring Items/Other $M 10.1 7.4 3.0 2.0 MINE/EQUITY PRODUCTION 2011 2012 2013E 2014E Taxes/Recovery $M 1.7 3.5 - - Gold Production 000 oz - - - - Net Income (operating) $M (7.6) (11.9) (8.0) (9.0) Total Cash Costs US$/oz - - - - Shares o/s $M 111.9 136.7 150.0 195.0 EPS (adjusted) $/sh ($0.07) ($0.09) ($0.05) ($0.05) 500,000 $1,000 P/E Multiple x n.m. n.m. n.m. n.m. Cash Flow (adjusted) $M (4.2) (8.4) (8.0) (9.0) Gold Production (oz) Total Cash Costs (US$/oz) CFPS x ($0.04) ($0.06) ($0.05) ($0.05) P/CF Multiple $M n.m. n.m. n.m. n.m. 400,000 $800 SCFP 2011 2012E 2013E 2014E Cash Flows from Operations Net Income $M (16.7) (18.4) (11.0) (11.0) 300,000 $600 DD&A $M - - - - Deferred Taxes $M 1.7 3.5 - - Non Recurring/Other $M 10.7 6.5 3.0 2.0 200,000 $400 Working Cap. Changes $M (0.7) - - - Net Operating Cash Flow (5.0) (8.4) (8.0) (9.0) Cash Flows From Investing Capital Expenditure (net) $M (37.6) (40.0) (50.0) (200.0) 100,000 $200 Acquis./Investments $M - - 70.0 - Other $M (1.2) - - - 0 $0 Net Investing Cash Flow (38.8) (40.0) 20.0 (200.0) 2012 2013E 2014E 2015E 2016E 2017E Cash Flows From Financing Equity Issues (net of costs) $M 32.7 119.0-200.0 RESERVES / RESOURCES Net Borrowings $M (1.4) (1.6) (1.8) (2.0) Gold Reserves Moz - Dividends Paid & Other $M - - - - AMC/oz $/oz n.m. Net Financing Cash Flow $M 31.3 117.4 (1.8) 198.0 Total Gold Resources Moz 8.0 Net Inc/Dec (incl FX) $M (12.5) 69.0 10.2 (11.0) AMC/oz $/oz 40 Cash at End of Year $M 39.0 108.0 118.2 107.2 AMC = Market Cap + LTD - Working Capital BALANCE SHEET 2011 2012E 2013E 2014E Total Resources = measured, indicated, and inferred Cash & Equivalents $M 39.0 108.0 118.2 107.2 NET ASSET VALUE (NAV) - 2013E Total Current Assets $M 40.0 109.0 119.2 108.2 Discount Status Own'ship $M $/Sh %NAV PP&E & Mining Interests $M 274.1 307.6 284.6 482.6 Trans-Canada 9.0% pre-feas 100% $531 3.56 58% Other $M 1.1 1.1 1.1 1.1 Operating NAV $531 $3.56 58% Total Assets $M 316.0 418.5 405.7 592.7 Target oz Current Liabilities $M 8.1 8.1 8.1 8.1 Red Lake JV 2.0 explor. 49% $98 0.66 11% Long Term Debt $M 8.1 6.5 4.7 2.7 Cove 1.0 explor. 100% $100 0.67 11% Other Long Term Liabilities $M 23.7 27.2 27.2 27.2 Saddle 0.5 explor. 55% $50 0.34 5% Total Liabilities $M 39.8 41.7 39.9 37.9 Sandstorm shares $56 $0.38 6% S/Holder Equity $M 276.2 376.8 365.8 554.8 Working Capital $83 $0.56 9% Total Liab. & S/Holder Equity $M 316.0 418.5 405.7 592.7 LT Debt ($5) ($0.03) -1% Working Capital $M 32.0 101.0 111.2 100.2 NAV $913 $6.13 Current P/NAV 0.5x, Beacon Securities estimates March 26, 2013 Page 15
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