Stan Manoukian’s Research Taking Research to the Next Level

Independent Credit Research May 26, 2016© Vol. 8, No.19

IAM GOLD Research Initiation

Stan Manoukian, 818-614-7797

smanoukian@manoukianresearch.com IAMGold is a mid-tier gold mining company with four operating gold mines (including joint ventures) on three

continents. During the last 12 months ended on March 30, 2016, the company sold 791,000 oz of gold produced at its

mines. The following chart shows the relative size of IAM compared to some other large and mid-tier gold miners,

based on their production and total proven and probable reserves:

Information on IAM owned mines is shown below:

Mine Essakane Rosebel Westwood

Country Burkina Faso Suriname Canada

Mine Life 8.2 years 6.6 years 20 years

Average annual production (000s oz) 368 316 60

Comments

Stable production levels in

the near-term;

Implementation of a small

solar power plant to reduce

costs

Production stable

until 2021, when it

is expected to start

declining

The only underground mine.

Seismic event on May 26, 2015

caused delay in production

ramp up. Westwood is

expected to become the highest

profitability mine for IAM

Ownership

90%;

10% - government of

Burkina Faso

95%;

5% - government of

Suriname

100%

Gold production (000s oz) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Barrick Gold Corp 1,390.0 1,445.0 1,663.0 1,619.0 1,280.0

Goldcorp Inc. 724.8 908.0 922.2 909.4 783.7

Cia de Minas Buenaventurra 85.3 91.5 91.2 90.0 79.2

Gold Fields Ltd 501.0 535.0 557.0 585.0 533.1

Kinross Gold Corp 629.4 660.9 680.8 623.7 687.5

Acacia Mining Plc 181.7 185.6 163.9 200.7 190.2

Eldorado Gold Corp 189.4 181.2 183.2 169.7 141.0

OceanaGold Corp 91.1 85.9 120.7 119.5 122.8

IAMGOLD 208.0 202.0 197.0 199.0 191.0

Rangold Resources 279.5 300.0 305.3 326.4 291.9

Reserves-contained gold (000s oz) 2011 2012 2013 2014 2015

Barrick Gold Corp 139,931 140,248 104,051 93,000 91,858

Goldcorp Inc. 64,700 67,080 54,400 49,580 40,730

Cia de Minas Buenaventurra 10,231 9,348 9,209 8,850 3,526

Gold Fields Ltd 77,612 59,400 52,400 48,122 46,240

Kinross Gold Corp 62,568 59,599 39,680 34,416 33,955

Acacia Mining Plc 31,500 32,000 29,000 30,100 28,600

Eldorado Gold Corp 19,047 25,770 27,728 25,952 25

OceanaGold Corp 3,650 3,640 3,140 3,020 0

IAMGOLD 13,300 11,327 10,127 8,608 7,690

Rangold Resources 16,280 16,360 15,000 15,000 15,000

1

Stan Manoukian’s Research Taking Research to the Next Level Taking a look at the gold grade and the expected life of IAM mines, it is clear that the near-term future of the company

belongs to the company’s mine in Quebec, Canada – Westwood:

Westwood commenced production in Q1 2013. However, in the beginning of 2014, the unusual seismic event occurred

on May 26, 2015. The company halted production at the mine after a rock fall that trapped nine miners for about 18

hours. Although the area of the rock fall was limited to a small portion of the company’s production, IAM had to cut

its 2015 production guidance, mainly due to the lower production expectations at Westwood. The problem was also

that May rock fall the third during three previous years. As a result, the company had to allocate higher Capex to

minimize the probability of any further seismic impact for the mine. The company forecasts that costs will decline as

production ramps up. But IAM had to change the mine design several times, and these changes have delayed the mine

ramp up until early 2017. Overall, Westwood mine promises to be the lowest-cost operation for IAM.

Terms Used 1. Cash cost per oz means COGS + SG&A + Exploration (cash items only) divided by the number of oz produced;

2. All-in sustaining costs/oz means cash costs of production plus sustainable Capex that will keep the existing

production level divided by the number of oz sold. Normally mining companies forecast this cost for no more than

1 year.

Each of three owned mines has substantial potential to grow through further exploration of green fields and brown

fields of neighboring lots of land. In addition to owned mines, IAM has two owned projects in growth pipeline and

several JVs: • Boto-Senegal project has been identified and explored to have 2.9 million tonnes of inferred resources averaging

0.046 oz/ton of gold.

• Pitangul – Brazil project has been identified and explored to have 4.3 million tonnes of inferred resources with

0.177oz/ton of gold. In the beginning of 2015, IAM sold its subsidiary Niobec for $530mm. Niobec is a Canadian underground mine – the

only source of pyrochlore in North America; as well as one of only three major producers of niobium ore (10% market

share). In 2014, niobium operations generated $233.8mm of sales and $112mm of EBITDA, followed by $43mm of

Capex. In the beginning of 2016, the company made a decision to liquidate its investment in the gold bullion. As a result, it

sold 135,148 ounces of gold bullion with a weighted average acquisition cost of $721.oz for proceeds of $1,239/oz -

$1,275/oz for a total of $170.3mm. IAM is the only gold miners with high historical holdings of the gold bullion. Due

to the strategic focus on ramping up the existing gold mines, IAM made a decision to enhance its liquidity by selling

the non-strategic niobium business and the gold bullion investments. Due to the operating uncertainties related to:

(a) the timing of full ramp up at Westwood mine and high requires capital spending in 2016;

(b) high cash costs and all-inclusive sustaining costs projected for the rest of 2016 and uncertain market gold

price,

Gold Grade (oz/ton) 2015

Barrick Gold 0.042

Goldcorp Inc. 0.034

Cia de Minas Buenaventurra 0.077

Gold Fields Ltd 0.948

Kinross Gold Corp 0.023

Acacia Mining Plc 0.120

IAMGOLD Rosebel 0.035

IAMGOLD Essakane 0.039

IAMGOLD Westwood 0.265

2

Stan Manoukian’s Research Taking Research to the Next Level IAM needs ample liquidity to meet its short-term financial obligations. IAM does not hedge gold price volatility.

Management believes that at current market price of the bonds, investment in brown field projects represents the highest

potential return on invested capital. The company has been accurate historically in regards to next year guidance. For 2016, IAM guides to the following

production and Capex:

Rosebel Mine: The chart at the next page shows historical operating performance of the Rosebel mine. Gold production has been

declining in 2015 and Q1 2016, despite the total amount of ore mined has been increasing. This phenomena is explained

by declining head grade – the company needs to process more ore to get the same level of gold. During 2015, IAM

produced 303,000 ounces of gold, compared to 342,000 ounces in 2014 and 354,000 ounces in 2013. Due to declining

gold prices and declining production, sales at Rosebel declined by 20.1% yoy in 2015 and by 18.0% in Q1 2016. In an effort to optimize operations at Rosebel, management guides to grade improvement at Rosebel and reducing

operating costs. As a result, total cash cost and all-in sustaining cost per ounce is projected to decline in 2017 and

further. However, for the rest of 2016 cost structure will remain challenging. We still project cash cost/oz reducing

from $849/oz in 2015 to $810/oz in 2016 and all-in sustaining cost from $1,165/oz in 2015 to $1,050 in 2016. However,

both costs are expected to decline precipitously after 2020, coinciding with the projected production decline. As indicated in the charts below, production is expected to stay stable and marginally increase during the next 4 years

until 2020. Starting 2021, production is estimated to start declining from 315,000 oz in 2020 to 240,000 oz in 2021 and

to 155,000 oz in 2022. Clearly, this forecast does not take into consideration possible further brownfield development

in areas adjacent to Rosebel. However, at this point, the company guides to the sustaining Capex of $50mm at Rosebel

in 2016, compared to $82.6mm in 2015. Also, the expansion Capex at Rosebel is estimated at $15mm in 2016,

compared to $4.8mm in 2015. Essakane Mine: Head grade at the mine has been gradually improving by ore mining optimization and reduction of the strip ratio. As a

result, gold production in 2016. As a result, despite the reduction of the market gold price, gold sales volume has been

increasing yoy by 16.8% in 2015 and by 5.5% in Q1 2016, respectively. In the meantime, dollar sales have increased

by 6.4% and 4.0% during same periods, respectively.

Mine Location Ownership

2015

production

000s oz

2016

production

guidance

Rosebel Suriname 95% 287 290

Essakane Burkina Faso 90% 383 370

Westwood Canada 100% 60 55

Joint ventures 76 70

Total Production 806 785

2016 Capex Sustaining Expansion Total

Rosebel $50 $15 $65

Essakane $85 $0 $85

Westwood $15 $65 $80

Total Mines $150 $80 $230

Corporate Capex $10

JV Capex $10

Total Capex $150 $80 $250

3

Rosebel Mine (Suriname)-95% 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016

Ore mined (000s tons) 13,508 3,081 3,002 3,656 4,112 13,851 3,541 3,295 3,311 3,933 14,080 3,683

Waste mined 12,615 13,556 11,613 12,150 11,896 49,215 12,517 12,715 13,220 10,980 49,432 12,917

Strip ratio 0.9 4.4 3.9 3.3 2.9 3.6 3.5 3.9 4.0 2.8 3.5 3.5

Total material mined 26,123 16,637 14,615 15,806 16,008 63,066 16,058 16,010 16,531 14,913 63,512 16,600

Ore milled (000s tons) 12,349 3,146 3,167 3,396 3,341 13,050 3,196 3,080 3,022 2,993 12,291 3,050

Head grade (g/t) 0.94 0.89 0.74 0.84 0.96 0.86 0.81 0.80 0.79 0.79 0.96 0.77

Recovery % 95% 94% 94% 96% 96% 95% 96% 95% 95% 95% 95% 96%

Formula Gold production (000s oz) 389 83 67 95 122 365 89 81 80 95 414 88

Correction (35) 1 4 (7) (23) (23) (9) (6) (6) (22) (112) (16)

Real gold production 354 84 71 88 99 342 80 75 74 73 302 72

Gold sales 342 91 78 84 96 349 82 77 68 74 301 70

Change 2.0% -9.9% -1.3% -19.0% -22.9% -13.8% -14.6%

Average realized gold price /oz $1,400 $1,286 $1,283 $1,264 $1,200 $1,256 $1,224 $1,196 $1,117 $1,102 $1,163 $1,183

Change -10.3% -4.8% -6.8% -11.6% -8.2% -7.4% -3.3%

Formula sales $478.8 $117.0 $100.1 $106.2 $115.2 $438.3 $100.4 $92.1 $76.0 $81.5 $350.1 $82.8

Correction $0.7 ($0.2) $1.0 ($0.7) $0.1 $0.4 $0.6 ($0.5) $0.5 ($0.0) $0.5 ($0.0)

Real Sales $479.5 $116.8 $101.1 $105.5 $115.3 $438.7 $101.0 $91.6 $76.5 $81.5 $350.6 $82.8

Change -8.5% -13.5% -9.4% -27.5% -29.3% -20.1% -18.0%

Cost of sales, excl. d&a $247.2 $75.8 $75.3 $74.4 $75.1 $300.6 $67.4 $65.7 $56.2 $69.6 $258.9 $57.0

Profit $232.3 $41.0 $25.8 $31.1 $40.2 $138.1 $33.6 $25.9 $20.3 $11.9 $91.7 $25.8

Gross Margin 48.4% 35.1% 25.5% 29.5% 34.9% 31.5% 33.3% 28.3% 26.5% 14.6% 26.2% 31.2%

All-in sustaining costs /oz $1,063 $1,031 $1,216 $1,048 $916 $1,045 $1,037 $1,104 $1,111 $1,420 $1,165 $955

Cash costs, excl. royalty /oz $639 $740 $865 $751 $613 $732 $784 $797 $804 $752 $785 $704

Royaty/oz $70 $73 $77 $77 $65 $72 $66 $67 $62 $60 $64 $64

Total cash costs/oz $709 $813 $942 $828 $678 $804 $850 $864 $866 $812 $849 $768

Net Capex $133.6 $18.6 $23.9 $19.3 $18.5 $80.3 $15.1 $16.8 $14.8 $40.7 $87.4 $12.6

Total cash profit/oz $337.0 $255.0 $67.0 $216.0 $284.0 $211.0 $187.0 $92.0 $6.0 ($318.0) ($2.0) $228.0

4

Essakane (Burkina Faso)-90% 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016

Ore mined (000s tons) 11,869 2,776 3,546 3,303 2,955 12,580 2,667 2,807 3,038 3,007 11,519 3,062

Waste mined 32,101 9,550 7,147 8,292 9,129 34,118 9,408 9,654 8,693 9,613 37,368 9,765

Strip ratio 2.7 3.4 2.0 2.5 3.1 2.7 3.5 3.4 2.9 3.2 3.2 3.2

Total material mined 43,970 12,326 10,693 11,595 12,084 46,698 12,075 12,461 11,731 12,620 48,887 12,827

Ore milled (000s tons) 10,613 2,884 3,725 2,692 2,596 11,897 2,526 2,763 3,295 3,132 11,716 2,747

Head grade (g/t) 0.89 0.89 0.96 1.17 1.28 1.08 1.33 1.23 1.23 1.18 1.24 1.21

Recovery % 92% 90% 90% 91% 92% 91% 91% 91% 91% 93% 92% 92%

Formula Gold production (000s oz) 313 72 99 113 112 399 104 101 110 106 424 110

Correction (36) 4 3 1 (13) (30) (5) (2) 1 3 2 (13)

Real gold production 277 76 102 114 99 369 99 99 111 109 426 97

Gold sales 270 72 94 114 98 363 91 86 111 133 424 96

Change 34.4% 26.4% -8.5% -3.3% 35.7% 16.8% 5.5%

Average realized gold price $1,408 $1,289 $1,290 $1,275 $1,200 $1,261 $1,213 $1,192 $1,122 $1,101 $1,149 $1,189

Change -10.4% -5.9% -7.6% -12.0% -8.3% -8.9% -2.0%

Formula sales $380.2 $92.8 $121.3 $145.8 $117.6 $457.7 $110.4 $102.5 $124.1 $146.4 $487.2 $114.1

Correction ($0.3) $0.1 ($0.1) ($19.3) ($0.4) $0.1 ($0.1) $0.5 $3.5 ($0.2) ($0.1) $0.6

Real Sales $379.9 $92.9 $121.2 $126.5 $117.2 $457.8 $110.3 $103.0 $127.6 $146.2 $487.1 $114.7

Change 20.5% 18.7% -15.0% 0.9% 24.7% 6.4% 4.0%

Cost of sales, excl. d&a $221.5 $66.9 $81.2 $95.2 $82.2 $325.5 $71.2 $67.8 $84.6 $130.5 $354.1 $72.7

Profit $158.4 $26.0 $40.0 $31.3 $35.0 $132.3 $39.1 $35.2 $43.0 $15.7 $133.0 $42.0

Gross Margin 41.7% 28.0% 33.0% 24.7% 29.9% 28.9% 35.4% 34.2% 33.7% 10.7% 27.3% 36.6%

All-in sustaining costs /oz $1,177 $1,233 $941 $1,149 $955 $1,060 $988 $1,022 $922 $1,024 $1,010 $1,116

Cash costs, excl. royalty /oz $687 $819 $796 $801 $781 $799 $717 $761 $704 $748 $762 $645

Royaty/oz $66 $56 $52 $60 $47 $53 $44 $41 $43 $54 $46 $46

Total cash costs/oz $753 $875 $848 $861 $828 $852 $761 $802 $747 $802 $808 $691

Net Capex $296.6 $35.3 $19.8 $22.3 $20.6 $98.0 $15.3 $18.3 $14.7 $18.4 $66.7 $33.5

Total cash profit/oz $231.0 $56.0 $349.0 $126.0 $245.0 $201.0 $225.0 $170.0 $200.0 $77.0 $139.0 $73.0

5

Stan Manoukian’s Research Taking Research to the Next Level Costs have been gradually improving in Q1 2016, and IAM projects cash costs/oz reduction from $808/oz in 2015 and

$691/oz in Q1 2016 to $700/oz in 2016. The chart showing the company’s operating performance projections shows

the future projected cash costs through 2022, including all-in sustaining costs reduction. Sustaining Capex at the mine is estimated to increase from $33.5mm in 2015 to $85.0mm in 2016. No expansion Capex

at Essakane mine is projected for 2016, compared to $6.3mm spent in 2014; $32.7mm in 2013 and $171.0mm in 2013. Westwood Mine: After three rock fall accidents, most investors consider Westwood a “show me” story. Without progress at Westwood,

and if gold prices continue being depressed, IAM is unlikely to be able to survive the gradual depletion of its reserves

in Rosebel and Essakane mines. As such, the company’s success at Westwood in quintessential. Without progress at

Westwood, IAM will likely try to purchase high quality performing gold assets to take advantage of its balance sheet

liquidity. To an extent, the company’s decision to sell the niobium business was Having said this, no material production increase is scheduled in 2016. Following the production interruption in 2015

and based on revised life-of-mine plan, 2016 efforts will be focused on underground development to expand the number

of mining areas and remedial work in the affected zones. Westwood production is expected to materially increase in

2017 to 115,000 oz – from expected 55,000 oz in 2016. Further increases are expected to elevate the production level

to 200,000 oz benchmark starting 2019. As a result of these production ramp up, costs per ounce will drastically decline,

making Westwood the highest cash generator at IAM. The company was late developing safety measures at Westwood and happened to be unprepared for the future rock fall

in 2015. As a result, management selected to take it slow and safe in regards to ramping up new mining zones. These

measures have been main reasons for the ramp up delay. We are allocating high probability to the success of the project.

However, the truth is that the company’s capital structure is so safe that the success or the failure of the project is

mainly relevant to the price of the stock rather than to the recovery of the bonds. Sustaining and expansion 2016 Capex at Westwood are estimated at $15mm and $65mm, respectively. Cash cost and

all-in sustaining costs are estimated at $1,400/oz and $1,680/oz, respectively for 2016, gradually declining to $550/oz

and $800/oz starting 2019.

Projections and Sensitivity Tests to Gold Prices Our calculations show that the company will likely spend between $250mm and $300mm of capital expenditures

annually in 2016-2018. In addition, depending on the progress of Westwood project and gold prices, IAM will allocate

remaining cash towards expansion Capex. The company’s minimum EBITDA range required to cover all fixed charges,

so that the company continues normal operations is between $300mm and $400mm, depending on the aggressiveness

of Capex projects and on demand in working capital:

The sensitivity table below shows that at current price of gold, IAM will likely generate $327mm of EBITDA in 2016,

and it will grow to $487mm by 2021. EBITDA under the worst case scenario that reflects the gold market price of

$1,000/oz increases from $158.1mm in 2016 to $289mm in 2021. The middle case (still conservative, given today’s

prices) of the gold price of $1,100/oz is leading to 2016 EBITDA of $237mm developing to $380mm in 2021:

Implied EBITDA Low High

Cash interest $43 $43

Cash taxes $18 $30

Normalized Capex $250 $275

Changes in WC ($10) $50

Implied EBITDA $301 $398

6

Westwood (Canada) - 100% 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016

Ore mined (000s tons) 76 39 25 131 132 327 118 99 9 69 295 80

Ore milled (000s tons) 150 2 33 153 140 328 115 103 10 147 375 85

Head grade (g/t) 14.39 10.85 9.41 7.54 8.12 7.98 6.29 7.06 6.11 3.11 5.26 5.77

Recovery % 92% 96% 93% 94% 96% 95% 96% 96% 95% 91% 95% 93%

Formula Gold production (000s oz) 32 13 7 30 33 80 23 22 2 6 48 14

Correction 31 (12) (1) (2) 2 (10) (1) 1 0 7 12 1

Real gold production 63 1 6 28 35 70 22 23 2 13 60 15

Gold sales 59 0 0 34 31 65 27 26 2 10 65 18

Change 10.2% -94.1% -67.7% 0.0% -33.3%

Average realized gold price $1,330 $0 $0 $1,265 $1,206 $1,237 $1,234 $1,198 $1,119 $1,063 $1,190 $1,199

Change -7.0% -11.5% -11.9% -3.8% -2.8%

Formula sales $78.5 $0.0 $0.0 $43.0 $37.4 $80.4 $33.3 $31.1 $2.2 $10.6 $77.4 $21.6

Correction $0.8 $5.2 $6.8 $9.6 $0.9 $22.5 $0.1 $0.7 $0.6 ($0.5) $0.8 $0.3

Real Sales $79.3 $5.2 $6.8 $52.6 $38.3 $102.9 $33.4 $31.8 $2.8 $10.1 $78.1 $21.9

Change 29.8% 542.3% 367.6% -94.7% -73.6% -24.1% -34.4%

Cost of sales, excl. d&a $51.1 $4.0 $2.9 $27.7 $25.2 $59.8 $30.3 $27.9 $18.2 $18.6 $95.0 $22.1

Profit $28.2 $1.2 $3.9 $24.9 $13.1 $43.1 $3.1 $3.9 ($15.4) ($8.5) ($16.9) ($0.2)

Gross Margin 35.6% 23.1% 57.4% 47.3% 34.2% 41.9% 9.3% 12.3% -550.0% -84.2% -21.6% -0.9%

All-in sustaining costs /oz $889 $0 $0 $950 $1,119 $1,237 $1,507 $1,044 $1,751 $1,265 $1,190 $890

Cash costs, excl. royalty /oz $802 $0 $0 $772 $845 $822 $1,130 $837 $1,432 $995 $1,001 $857

Royaty/oz $30 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total cash costs/oz $832 $0 $0 $772 $845 $822 $1,130 $837 $1,432 $995 $1,001 $857

Net Capex $126.0 $35.5 $19.5 $17.0 $36.5 $108.5 $19.5 $17.2 $15.7 $19.7 $72.1 $21.4

Total cash profit/oz $441.0 $0.0 $0.0 $315.0 $87.0 $0.0 ($273.0) $154.0 ($632.0) ($202.0) $0.0 $309.0

7

Sadiola Mine - 41% - equity 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016

Ore mined (000s tons) 925 2,015 926 1,021 1,082 5,044 1,493 1,521 1,565 1,810 6,389 1,105

Ore milled (000s tons) 1,991 436 525 536 564 2,061 471 511 532 561 2,075 482

Head grade (g/t) 1.38 1.39 1.39 1.29 1.25 1.32 1.23 1.14 1.09 0.96 1.10 1.22

Recovery % 91% 93% 94% 94% 93% 93% 94% 95% 94% 93% 94% 95%

Formula Gold production (000s oz) 37 84 39 40 41 200 56 53 52 52 213 41

Correction 49 (65) (15) (19) (21) (116) (37) (36) (35) (36) (144) (22)

Real gold production 86 19 24 21 20 84 19 17 17 16 69 19

Gold sales 86 17 26 21 21 85 19 17 15 18 69 19

Average realized gold price $1,404 $1,281 $1,287 $1,287 $1,197 $1,263 $1,224 $1,193 $1,124 $1,112 $1,165 $1,193

Formula sales $120.7 $21.8 $33.5 $27.0 $25.1 $107.4 $23.3 $20.3 $16.9 $20.0 $80.4 $22.7

Correction $40.0 $4.9 $2.5 $3.0 $3.4 $13.8 $2.1 $2.5 $1.4 $1.9 $8.0 $1.1

Real Sales $160.7 $26.7 $36.0 $30.0 $28.5 $121.2 $25.4 $22.8 $18.3 $21.9 $88.4 $23.8

Cost of sales, excl. d&a $139.9 $26.4 $39.2 $26.4 $25.2 $117.2 $18.8 $13.2 $10.9 $17.2 $60.1 $16.5

Profit $20.8 $0.3 ($3.2) $3.6 $3.3 $4.0 $6.6 $9.6 $7.4 $4.7 $28.3 $7.3

Gross Margin 12.9% 1.1% -8.9% 12.0% 11.6% 3.3% 26.0% 42.1% 40.4% 21.5% 32.0% 30.7%

All-in sustaining costs /oz $1,476 $1,170 $1,050 $1,077 $1,100 $1,083 $914 $706 $695 $1,010 $839 $821

Net Capex $51.2 $3.8 $2.3 $1.0 $3.8 $10.9 $1.7 $1.3 $1.7 $2.8 $7.5 $0.9

Total cash profit/oz ($72.0) $111.0 $237.0 $210.0 $97.0 $180.0 $310.0 $487.0 $429.0 $102.0 $326.0 $372.0

8

Operations 2012 2013 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 2016e 2017e 2018e 2019e 2020e 2021e 2022e

Gold sales (000s oz)

Owner-operators 751 671 739 187 176 170 199 732 171 715 800 825 880 910 850 765

JVs 130 113 96 21 19 16 20 76 20 70 70 70 70 70 70 70

Gold sales (000s oz) 881 784 835 208 195 186 219 808 191 785 870 895 950 980 920 835

Average realized price/oz $1,667 $1,399 $1,259 $1,221 $1,194 $1,121 $1,101 $1,158 $1,188 $1,215 $1,215 $1,215 $1,215 $1,215 $1,215 $1,215

Sales $1,468.6 $1,096.8 $1,051.3 $254.0 $232.8 $208.5 $241.1 $935.7 $226.9 $953.8 $1,057.1 $1,087.4 $1,154.3 $1,190.7 $1,117.8 $1,014.5

Corrections $201.4 $50.3 ($43.4) ($9.3) ($6.3) ($0.9) ($2.9) ($18.7) ($7.2) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Total sales $1,670.0 $1,147.1 $1,007.9 $244.7 $226.5 $207.6 $238.2 $917.0 $219.7 $953.8 $1,057.1 $1,087.4 $1,154.3 $1,190.7 $1,117.8 $1,014.5

Production

Rosebel 382 336 325 76 71 70 70 287 68 290 310 340 300 315 240 155

Essakane 315 250 332 89 89 107 98 383 88 370 375 370 370 390 390 390

Westwood 4 63 82 22 23 2 13 60 15 55 115 115 210 205 220 220

Mine production 701 649 739 187 183 179 181 730 171 715 800 825 880 910 850 765

JVs 129 113 95 21 19 18 18 76 20 70 70 70 70 70 70 70

Gold production (000s oz) 830 762 834 208 202 197 199 806 191 785 870 895 950 980 920 835

Cash cost /oz

Rosebel $671 $718 $804 $850 $864 $866 $812 $849 $768 $810 $800 $700 $785 $810 $665 $620

Essakane $603 $753 $852 $761 $802 $747 $802 $808 $691 $700 $705 $715 $900 $800 $745 $800

Westwood $137 $832 $768 $1,130 $837 $1,438 $995 $1,001 $857 $1,400 $875 $1,000 $550 $575 $570 $560

Mine production $637 $743 $822 $841 $831 $801 $820 $840 $736 $798 $766 $749 $777 $753 $677 $695

JVs $1,100 $1,112 $1,056 $889 $688 $690 $998 $943 $833 $800 $800 $800 $800 $800 $800 $800

Cash cost, excl. royalty $624 $729 $790 $796 $768 $740 $771 $784 $694 $743 $711 $694 $722 $698 $622 $640

Royalty /oz $91 $72 $58 $50 $49 $51 $54 $51 $52 $55 $55 $55 $55 $55 $55 $55

Cash costs /oz $715 $801 $848 $846 $817 $791 $825 $835 $746 $798 $766 $749 $777 $753 $677 $695

COGS $593.5 $610.4 $707.2 $176.0 $165.0 $155.8 $164.2 $673.0 $142.5 $626.9 $669.0 $673.6 $740.0 $741.0 $631.6 $587.3

All-in sustaining costs /oz

Rosebel $884 $1,063 $1,045 $1,037 $1,104 $1,111 $1,420 $1,165 $955 $1,050 $1,025 $975 $1,000 $980 $800 $620

Essakane $937 $1,177 $1,060 $988 $1,022 $922 $1,024 $1,010 $1,116 $1,000 $1,030 $1,100 $930 $915 $880 $850

Westwood $1,959 $889 $955 $1,507 $1,044 $1,751 $1,265 $1,292 $890 $1,680 $1,500 $1,500 $800 $815 $830 $735

Mine production $998 $1,174 $1,090 $1,135 $1,112 $1,056 $1,218 $1,145 $1,111 $1,073 $1,096 $1,104 $923 $915 $844 $770

JVs $1,222 $1,156 $983 $921 $736 $721 $876 $890 $852 $850 $850 $850 $850 $850 $850 $850

All-in sustaining cost /oz $1,054 $1,153 $1,101 $1,113 $1,076 $1,027 $1,202 $1,118 $1,084 $1,053 $1,076 $1,084 $917 $910 $845 $777

Implied cash cost, excl. roy. $550 $572 $660 $166 $150 $138 $169 $633 $133 $584 $619 $621 $686 $684 $572 $534

Implied Royalties $80 $56 $48 $10 $10 $9 $12 $41 $10 $43 $48 $49 $52 $54 $51 $46

Implied Capex $299 $276 $211 $56 $51 $44 $83 $229 $65 $200 $269 $301 $133 $154 $154 $69

Real sust. mining Capex $218 $299 $136 $38 $37 $30 $61 $166 $49 $155 $269 $301 $133 $154 $154 $69

Real expansion Capex $480 $369 $145 $16 $19 $17 $25 $78 $22 $85 Highly depends on gold price

Implied Capex-% of total 42.8% 41.3% 75.2% 103.6% 89.5% 93.2% 95.4% 93.9% 73.5% 79.8%

9

2012 2013 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 2016e 2017e 2018e 2019e 2020e 2021e 2022e

Sustaining Capex

Rosebel $108.0 $115.6 $58.9 $13.6 $15.1 $14.8 $39.1 $82.6 $12.1 $50.0 $69.8 $93.5 $64.5 $53.6 $32.4 $0.0

Essakane $110.0 $114.9 $54.6 $13.2 $16.0 $13.5 $17.7 $60.4 $33.5 $85.0 $121.9 $142.5 $11.1 $44.9 $52.7 $19.5

Westwood $0.0 $0.0 $16.6 $10.2 $5.3 $0.9 $1.2 $17.6 $3.0 $15.0 $71.9 $57.5 $52.5 $49.2 $57.2 $38.5

Segments $218.0 $230.5 $130.1 $37.0 $36.4 $29.2 $58.0 $160.6 $48.6 $150.0 $263.5 $293.5 $128.1 $147.6 $142.3 $58.0

Corporate $35.7 $1.8 $0.1 $0.2 $0.1 $0.2 $0.6 $0.0

JVs $33.1 $4.1 $0.4 $0.7 $0.7 $3.0 $4.8 $0.3 $5.0 $5.9 $7.1 $5.1 $6.8 $12.1 $10.9

Total sustainable Capex $218.0 $299.3 $136.0 $37.5 $37.3 $30.0 $61.2 $166.0 $48.9 $155.0 $269.4 $300.6 $133.2 $154.4 $154.4 $68.9

Expansion Capex

Rosebel $16.0 $18.0 $20.7 $1.5 $1.7 $0.0 $1.6 $4.8 $0.5 $15.0

Essakane $144.4 $171.0 $32.7 $2.1 $2.3 $1.2 $0.7 $6.3 $0.0 $0.0

Westwood $0.0 $118.1 $73.9 $9.3 $11.9 $14.8 $18.5 $54.5 $18.4 $65.0

Segments $160.4 $307.1 $127.3 $12.9 $15.9 $16.0 $20.8 $65.6 $18.9 $80.0

Corporate $261.9 $0.0 $0.0 $0.0 $0.0 $0.0 $2.5 $2.5 $1.5

Cote Gold $40.0 $44.1 $10.9 $1.9 $1.9 $0.8 $0.6 $5.2 $0.3

JVs $18.0 $18.1 $6.8 $1.3 $1.3 $0.3 $1.4 $4.3 $1.3 $5.0

Total expansion Capex $480.3 $369.3 $145.0 $16.1 $19.1 $17.1 $25.3 $77.6 $22.0 $85.0

Total Capex

Rosebel $124.0 $133.6 $79.6 $15.1 $16.8 $14.8 $40.7 $87.4 $12.6 $65.0

Essakane $254.4 $285.9 $87.3 $15.3 $18.3 $14.7 $18.4 $66.7 $33.5 $85.0

Westwood $0.0 $118.1 $90.5 $19.5 $17.2 $15.7 $19.7 $72.1 $21.4 $80.0

Segments $378.4 $537.6 $257.4 $49.9 $52.3 $45.2 $78.8 $226.2 $67.5 $230.0

Corporate $261.9 $35.7 $1.8 $0.1 $0.2 $0.1 $2.7 $3.1 $10.0 $10.0

Cote Gold $40.0 $44.1 $10.9 $1.9 $1.9 $0.8 $0.6 $5.2 $0.3 $0.0

JVs $18.0 $51.2 $10.9 $1.7 $2.0 $1.0 $4.4 $9.1 $10.0 $10.0

Total Capex $698.3 $668.6 $281.0 $53.6 $56.4 $47.1 $86.5 $243.6 $87.8 $250.0

10

Stan Manoukian’s Research Taking Research to the Next Level

As a result of this analysis (please see following pages of projections), investors can see that even if the project in

Westwood has further ramp up delays, IAM will still have ample liquidity to accelerate EBITDA growth by buying

high quality performing assets. As such, we are perplexed by the fact that the company’s stock has a market

capitalization of $1.4bn, and the bonds are trading at yields close to 12%, while IAM’s cash position covers its current

debt. It is clear that IAM stock has been driven mainly by the trading of gold-price-proxy market movements, while

the price of the bonds has been mainly fueled by the market’s perception of the probability that the company will start

generating positive cash flows in the near-term:

Moreover, it looks to us that even under the case of $1,100/oz gold prices sticking through the next 5-6 years, IAM

will still be sustaining its operations at cash-flow-generating levels, while preserving existing cash. The company is considered mid-tier gold miner, and its relatively poor quality of existing producing assets is reflected

in higher costs per ounce, compared to larger miners. However, we think that IAM will change into a more competitive

gold producer after the Westwood ramp up is accomplished.

EBITDA

Sensitivity 2016e 2017e 2018e 2019e 2020e 2021e 2022e

Gold Price $1,215 $326.9 $388.1 $413.9 $414.3 $449.7 $486.3 $427.2

Gold Price $1,250 $354.4 $418.5 $445.2 $447.5 $484.0 $518.5 $456.5

Gold Price $1,300 $393.6 $462.0 $490.0 $495.0 $533.0 $564.5 $498.2

Gold Price $1,350 $432.9 $505.5 $534.7 $542.5 $582.0 $610.5 $540.0

Gold Price $1,150 $275.9 $331.5 $355.7 $352.5 $386.0 $426.5 $373.0

Gold Price $1,100 $236.6 $288.0 $311.0 $305.0 $337.0 $380.5 $331.2

Gold Price $1,050 $197.4 $244.5 $266.2 $257.5 $288.0 $334.5 $289.5

Gold Price $1,000 $158.1 $201.0 $221.5 $210.0 $239.0 $288.5 $247.7

11

Stan Manoukian’s Research Taking Research to the Next Level

Cash cost ($/oz) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Barrick Gold Corp $642 $624 $570 $547 $553

Goldcorp Inc. $585 $547 $597 $687 $557

Cia de Minas Buenaventurra $823 $695 $632 $771 $688

Gold Fields Ltd $1,146 $1,100 $961 $927 $953

Kinross Gold Corp $696 $712 $655 $676 $682

Acacia Mining Plc $693 $729 $807 $777 $783

Eldorado Gold Corp $658 $620 $609 $618 $578

OceanaGold Corp $402 $474 $473 $441 $436

IAMGOLD $846 $817 $791 $825 $746

Rangold Resources $708 $684 $699 $632 $648

All-in sustainable cost $/oz Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Barrick Gold $927 $895 $771 $733 $706

Goldcorp Inc. $880 $846 $848 $977 $836

Cia de Minas Buenaventurra $1,126 $904 $1,171 $953 $728

Gold Fields Ltd $1,143 $1,029 $942 $920 $949

Kinross Gold Corp $957 $1,006 $936 $988 $957

Acacia Mining Plc $1,117 $1,149 $1,195 $1,008 $959

Eldorado Gold Corp $729 $900 $835 $914 $886

OceanaGold Corp $630 $734 $736 $723 $716

IAMGOLD $1,113 $1,076 $1,027 $1,202 $1,084

Cash Margin/oz X Production Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Barrick Gold $409 $432 $582 $588 $617

Goldcorp Inc. $247 $316 $252 $108 $276

Cia de Minas Buenaventurra $8 $27 ($5) $13 $36

Gold Fields Ltd $39 $88 $100 $103 $127

Kinross Gold Corp $166 $124 $126 $67 $159

Acacia Mining Plc $19 $8 ($12) $18 $44

Eldorado Gold Corp $93 $53 $52 $31 $43

OceanaGold Corp $54 $40 $46 $45 $58

IAMGOLD $22 $24 $19 ($21) $20

Enterprise Value EV(mill ions) EV/Prod EV/Reserves EV/Margin EV/EBITDA

Barrick Gold $29,942 5.0x 0.3x 13.5x 8.5x

Goldcorp Inc. $17,191 4.9x 0.4x 18.1x 11.0x

Cia de Minas Buenaventurra $3,217 9.1x 0.9x 45.1x 9.6x

Gold Fields Ltd $4,274 1.9x 0.1x 10.2x 4.2x

Kinross Gold Corp $7,358 2.8x 0.2x 15.4x 6.2x

Acacia Mining Plc $1,866 2.5x 0.1x 32.5x 22.5x

Eldorado Gold Corp $3,707 5.5x NA 20.7x 15.2x

OceanaGold Corp $2,003 4.5x NA 10.6x 7.6x

IAMGOLD $1,558 2.0x 0.2x 37.9x 6.7x

Rangold Resources $8,206 6.7x 0.5x NA 21.4x

12

IAM Gold 2012 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 2016e 2017e 2018e 2019e

Revenues from owned mines 1,670 1,147 210 221 295 270 997 244 226 202 238 915 219 869 972 1,002 1,069

Gold revenue - JV 0 0 7 10 (8) 29 121 1 1 5 22 88 1 85 85 85 85

Total Net Revenue 1,670 1,147 217 231 287 273 1,008 245 227 208 238 917 220 954 1,057 1,087 1,154

Growth Y/Y -0.2% -31.3% -12.1% 12.6% -2.1% -27.6% -12.6% -9.0% -10.2% 321.1% 409.2% 356.5% 25.9%

COGS 948 807 185 207 261 240 893 232 229 228 284 972 213 829 863 858 924

Total Gross Profit 722 340 32 25 25 33 115 13 (2) (20) (45) (55) 7 125 194 230 230

Gross Margin 43.2% 29.6% 14.8% 10.6% 8.8% 12.1% 11.4% 5.3% -1.0% -9.6% -19.0% -6.0% 3.0% 13.1% 18.4% 21.1% 19.9%

SG&A 58 51 11 12 12 11 45 11 10 9 9 39 9 36 36 36 36

% of Sales 3.5% 4.4% 4.8% 5.0% 4.3% 3.9% 4.4% 4.3% 4.5% 4.5% 3.9% 4.3% 4.3% 3.8% 3.4% 3.3% 3.1%

Exploration expense 113 69 9 12 10 12 43 10 8 7 7 31 6 30 30 30 30

Amortization of Intangibles & other 5 890 7 9 8 47 70 10 (1) 6 623 638 7 10 10 10 10

Operating Income 546 (670) 6 (7) (5) (36) (43) (17) (19) (42) (684) (762) (16) 49 118 154 154

Operating Margin 32.7% -58.4% 2.6% -3.0% -1.7% -13.4% -4.2% -6.9% -8.4% -20.3% -287.1% -83.1% -7.4% 5.1% 11.2% 14.2% 13.4%

Interest expense 19 24 2 5 9 10 27 10 10 10 9 38 8 43 43 43 43

Other Expense (31) 108 0 (7) 1 54 48 (33) (12) 25 14 (7) (80) 0 0 0 0

Income Taxes 199 (9) 9 5 62 42 118 22 7 8 (25) 12 6 (18) (25) (27) (44)

Equity from JVs 12 (67) (7) (11) (3) (5) (26) 3 3 (0) 4 10 4 20 25 25 25

Net Income 371 (861) (13) (21) (79) (148) (262) (13) (20) (85) (678) (795) 53 43 125 163 180

D&A 155 175 46 55 72 58 231 63 67 69 65 264 62 268 260 250 250

EBITDA adjustments (61) (102) 8 4 5 46 63 12 2 (37) 57 33 48 0 0 0 0

EBITDA 758 363 76 72 90 127 364 77 56 3 67 204 107 357 418 444 444

EBITDA Margin 45.4% 31.6% 34.8% 31.0% 31.5% 46.6% 36.2% 31.5% 24.9% 1.4% 28.2% 22.2% 48.7% 37.4% 39.5% 40.8% 38.5%

Liquidity

EBITDA 758 363 76 72 90 127 364 77 56 3 67 204 107 357 418 444 444

Capex (650) (617) (99) (112) (72) (62) (344) (49) (52) (42) (49) (191) (67) (250) (269) (301) (133)

Acquisitions, divestitures (549) (71) (5) 1 11 17 24 552 (4) 1 (79) 470 162 162 0 0 0

Interest Expense (3) (28) (2) (2) (0) (19) (23) (1) (17) (0) (16) (33) (0) (43) (43) (43) (43)

Income Taxes (214) (128) (17) (8) (6) (2) (33) (3) (3) 3 (2) (6) (2) (18) (18) (18) (18)

Change in Working Capitlal (86) 12 (31) 33 31 (53) (20) (45) (21) 4 (110) (172) (54) (66) (20) (8) (8)

Free Cash Flow (744) (470) (78) (17) 55 9 (30) 533 (41) (32) (189) 271 146 143 68 75 243

Cash flow from operations (incl. int) 412 218 27 94 115 54 290 29 15 10 (61) (7) 51 231 338 376 376

Cash flow from investments (1,199) (688) (104) (111) (60) (45) (320) 504 (56) (42) (128) 278 95 (250) (269) (301) (133)

Cash flow from financing (excl. int) 537 (105) (5) (4) (4) (9) (22) 26 (10) (14) 37 39 (41) 19 (68) (75) (243)

Total cash flow (249) (575) (82) (20) 50 0 (52) 559 (51) (46) (152) 311 106 0 0 0 0

13

IAM Gold 2012 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 2016e 2017e 2018e 2019e

Balance Sheet

Cash and Marketable Securities 797 222 140 120 171 159 159 792 688 633 548 548 658 639 707 782 1,025

Gold Bullion - market value 97 97 97 97 97 97 97 97 97 97 97 97 0 0 0 0 0

Accounts Receivable 210 117 115 101 75 56 56 51 48 40 83 83 92 100 111 121 123

Days Accounts Receivable 45.3 36.8 48.3 39.7 23.8 18.6 19.9 19.1 19.3 17.6 31.6 32.4 38.2 37.7 37.8 40.1 38.4

Inventories 260 300 276 268 258 245 245 233 249 269 224 224 212 222 232 234 245

Days Inventory (CGS) 98.5 133.9 135.4 117.9 89.7 93.1 98.8 91.6 98.8 107.6 71.9 83.0 90.3 96.4 96.8 98.2 95.5

Deferred Taxes & Other CA 0 0 0 0 0 629 629 0 0 0 0 0 0 0 0 0 0

Accounts Payable 219 186 183 172 190 170 170 161 151 162 143 143 149 155 156 160 165

Days Accounts Payable 83.3 82.8 89.7 75.6 66.3 64.4 68.3 63.2 59.9 64.9 46.0 53.1 63.4 67.3 65.1 67.2 64.3

Accrued Liabilities 116 30 38 30 26 226 226 82 61 67 37 37 33 35 35 35 35

Days Accrued Liabilities 44.0 13.2 18.3 13.2 9.1 84.8 91.0 31.7 24.2 26.6 11.8 13.7 13.7 15.2 14.6 14.7 13.6

Debt

Total Debt 639 640 641 641 641 642 642 637 637 628 698 698 635 635 635 635 635

Net Debt (net of excess cash) (159) 418 501 521 471 483 483 (156) (51) (5) 150 150 (23) (4) (72) (147) (390)

LTM EBITDA 758 363 364 366 351 263 204 204 234 357 418 444 444

LTM Interest Expense, cash 3 28 23 22 36 36 33 33 33 43 43 43 43

LTM Capex 650 617 344 293 233 204 191 191 210 250 269 301 133

Ratios

Leverage 0.8x 1.8x 1.8x 1.7x 1.8x 2.4x 3.4x 3.4x 2.7x 1.8x 1.5x 1.4x 1.4x

Net Leverage (net of excess) -0.2x 1.2x 1.3x -0.4x -0.1x 0.0x 0.7x 0.7x -0.1x 0.0x -0.2x -0.3x -0.9x

14

Stan Manoukian’s Research Taking Research to the Next Level

Please use the attached Excel model for further clarification of calculations.

Capital Structure

After selling its non-core assets and the gold bullion, IAM had $658.1mm of cash and $635mm of debt at the end of

March 2016. The company has recently enhanced liquidity by securing a $250mm credit revolver facility with the fully

committed $100mm facility and $150mm of accordion. In addition, IAM’s subsidiary in Quebec has secured a $140mm

of credit revolver.

Top 10 highest grade underground gold mines

Mine Country Major OwnerAu grade,

0z / ton

Ore

reserves

(000s)

tonnes

Contained

Au, 000s

ozt

Fire Creek U.S.Klondex

Mines1.556 170 172

Macasa CanadaKirkland Lake

Gold0.783 1,330 950

Kedrovka RussiaZapadnaya

Gold0.776 380 269

Turquoise

RidgeU.S. Barrick Gold 0.596 10,932 5,943

Toguracl IndonesiaNewcrest

Mining0.564 1,000 514

Orcopampa Peru Buenaventura 0.557 630 321

Dvolnoye Russia Kinross Gold 0.529 2,137 1,028

Pinson U.S.Atna

Resources0.487 353 157

Midas U.S.Klondex

Mines0.455 220 92

Pimenton Chile Cerro Grande 0.392 138 49

Cash

InterestSecurity Coupon

Face

Value

Market

Price

Market

Value

LTM

LeverageYTW

Cash as of March 30, 2016 $658.1

$0.0 Ressources Quebec facility NA $0.0 100.0% $0.0 $140mm total size

$0.0 HoldCo Credit Revolver NA $0.0 100.0% $0.0 $250mm total size

Total Secured Debt $0.0 $0.0

$42.9 Sr. Unsecured notes due 10/01/2020 6.75% $635.0 83.0% $527.1 11.9%

Total Debt $635.0 $527.1 2.3x

Total Net Debt ($23.1) ($131.1)

Equity shares 405.9 $3.37 1,367.9 5.8x

LTM EBITDA $233.5

15

Stan Manoukian’s Research Taking Research to the Next Level Under the indenture governing the senior unsecured notes, if the company makes certain asset sales, it may use an

amount equal to the net proceeds to repay certain debt obligations and/or reinvest, or commit to reinvest, in the

company’s business, within 365 days after the applicable asset sale. At the end of the 365-day period, if there remains

$50mm or more of the net proceeds that the company has not used in this manner, the company would be required to

use any such excess proceeds to offer to purchase the senior unsecured notes at par in the manner described in the

indenture. According to management, cash plans have been made, and investors should expect to get further detailed

allocation of further spending shortly. However, even at this point, the company’s Capex plans for 2016 have been

announced. We feel that there is a material disconnect between the price of the company’s stock and the yield on the bonds. Clearly,

equity and high yield traders were born on different planets… We feel that the stressed level of the bonds’ yield is

deceivingly low, since there is a strong probability that the price of the bonds will be at least points higher with the

next 12 months, fueled by the developments at Westwood, further cash flow – accretive acquisitions or both. In the

meantime, the price of the stock will continue being driven by the price of gold. As a result, arbitrage seekers may

consider shorting gold ETFs instead of the stock. We, however, would consider taking a naked long stance on the

bonds: the mispriced bonds will likely return at least 20% within the next 12 months to fundamental investors:

5/26/16 ($527.1) current market price

10/1/16 $14.9 coupon

4/1/16 $21.4 coupon

5/26/17 $590.6 Estimated price 93.0%

IRR 20.3%

The bonds represent an outstanding risk-adjusted return, in our view, and all stressed and distressed investors should

consider buying them, in our opinion.

16

Stan Manoukian’s Research Taking Research to the Next Level

Disclosure Regarding Research Report The views expressed about the debt securities that are the subject of this research report accurately reflect the personal

views, as of the report’s publication date, of the Independent Credit Research, LLC (“ICR”) analyst primarily

responsible for drafting the report. No part of the analyst’s compensation was, is, or will be, directly or indirectly,

related to the specific recommendations or views expressed by him in this research report. The analyst’s evaluation of

the subject debt securities may change subsequent to the publication of this report. Neither the analyst nor ICR assumes

any duty to update the information contained in this report. This research report is for informational purposes only and

does not provide individually tailored tax, legal, or investment advice. It has been prepared without regard to the

individual financial circumstances and objectives of persons who receive it. The debt instruments discussed in this

research report may not be suitable for all investors. ICR strongly recommends that investors independently evaluate

particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The

appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and

objectives. Therefore, any decisions you make based upon any information contained in this research report are your

sole responsibility. Under no circumstances is this report to be used or considered as an offer to sell or a solicitation of

any offer to buy any equity or debt security or any options, futures or other derivatives related to such securities.

If you do not agree with these terms, please delete the publication.

17