Global Gold Outlook: The Time is Right for GoldApr 10, 2016 · into a $1,250 gold price. A dovish...

EQU

ITY

RESE

ARC

H RBC Global Equity TeamClick here for contributing analysts' contactinformation

April 10, 2016

Global Gold Outlook: The Time is Right for GoldFundamental Drivers Expected to Provide Upside for GoldA Positive Outlook for Gold into H2/16A more dovish posture from the Fed, declining real rates and improving fundamental demand forphysical gold, have lead to our more positive outlook for gold. For the balance of 2016 we expect goldto trade in a broad $1,200/oz to $1,300/oz range with the gold price improving over the course of theyear. There are a number of positive demand catalysts, including steady fundamental demand fromChina and India, systematic central bank purchases, and US inflows into the physical gold ETFs (Exhibit4). This later trend is reminiscent of the fundamental investment demand observed from 2005 to 2007(Exhibit 8).

Gold price forecast increased and silver maintainedWe are increasing our average gold price forecast by 9% to $1,250/oz in 2016 and by 8% to $1,300/oz for2017/long term (Exhibit 3). Our silver price forecast remains unchanged at $15.50/oz in 2016, $16.50/oz in 2017 and $17.50/oz in 2018/long term. We expect precious metal prices to remain volatile forthe foreseeable future while the market assesses the outcome of the dovish FOMC posture. RBC nowforecasts a single rate hike in 2016, and we believe that this “low and slow” path has been discountedinto a $1,250 gold price. A dovish Fed outlook into 2017, growing inflation expectations or a financialmarket shock would lead to further upside for gold.

Equity outlook – look for seasonal trading opportunities in 2016We expect gold equities to continue to lead the direction of the commodity in 2016 and recommendthat investors look for pullbacks in trading ranges to add to core gold/silver equity holdings. Near termwe could see a pullback in May-June, during a period of seasonal weakness for physical gold and gold/silver equities (Exhibit 7). We would use any share price weakness as a buying opportunity ahead ofseasonal strength in August-September.

In a Resource Equity portfolio we recommend that investors hold an Overweight position in preciousmetals stocks (was Market Weight) versus non-precious metal commodities. And in a Diversified Equityportfolio we recommend a Market Weight position in precious metals stocks (was Underweight).

Look for operating leverage and strong fundamentals for equity selectionThe Q1/16 rally favoured the large cap North American Tier I producers and out of favour South Africangold miners. If gold continues to perform positively, as we believe, we would expect some of the Tier IIand III names with greater operating leverage could begin to outperform. On average the target pricereturns for our global coverage of gold producers has increased by 25% (Exhibits 1-2). We recommendinvestors focus on companies with high quality reserves, attractive margins and solid balance sheets.

Rating changes: Kinross and AngloGold Ashanti have been upgraded to Outperform from SectorPerform and Goldcorp and Fresnillo have been downgraded to Underperform from Sector Perform.

Preferred Gold / Silver Equities• Australia: Silver Lake and Gold Road;• London: Acacia, AngloGold Ashanti, and Hochschild;• North America: Kinross, Agnico Eagle, Silver Wheaton, Detour Gold, Klondex, Guyana Goldfields,

Osisko Gold Royalties and Franco Nevada.

Priced as of prior trading day's market close, EST (unless otherwise noted).All values in USD unless otherwise noted.

For Required Non-U.S. Analyst and Conflicts Disclosures, see page 26.

https://www.rbcinsight.com/CM/Share/ResearchViewer/?SSS_696781D564E74BCBA25042E54C029607

https://www.rbcinsight.com/CM/Share/ResearchViewer/?SSS_C09951E9A9AB260D2D9F35299A7CDEB9

Table of contents

Target price and ratings changes .......................................................................................... 3

H2/2016 expectations: Gold price volatility with upside for gold equities ............................ 5

A Q1/16 relief rally, that was enhanced by new gold ETF inflows ............................................. 5

Increasing beta offers opportunities for gold equities .......................................................... 7

Upside and downside catalysts for our gold price forecast ................................................... 8

Upside catalysts for the gold price ............................................................................................. 8

Downside catalysts for the gold price ........................................................................................ 8

Drivers for our $1,300 gold price assumption in 2017 ............................................................... 8

Gold price performance in a declining real rate environment .............................................. 9

Negative real rates becoming a positive catalyst ....................................................................... 9

Inflation is not expected to be a catalyst ................................................................................... 9

Seasonal trends offer trading opportunities ....................................................................... 10

US investment demand remains a key driver for gold prices .............................................. 11

A pickup in gold ETF demand has been a positive Q1/16 factor .............................................. 11

Speculative flows have a near term impact on gold prices ...................................................... 11

Demand drivers: steady central bank and Chinese/Indian demand .................................... 13

Positive impact from central bank buying ............................................................................... 13

Chinese demand is helping to maintain a floor price for gold ................................................. 14

Impact of Renminbi moves on gold demand ........................................................................... 15

Limited impact of Indian government import reduction schemes .......................................... 15

RBC CM gold supply and demand assumptions .................................................................. 16

Supply drivers ........................................................................................................................... 16

Demand drivers ........................................................................................................................ 16

Technical outlook for Gold ................................................................................................. 18

Global Gold Outlook: The Time is Right for Gold

April 10, 2016 2

Target price and ratings changes Exhibit 1: Price target change summary

Current Target (12 month) Implied Rt. NAV/shr AdjCFPS

Company Ticker Analyst Rating Price Prev. New % Chg to Target Prev. New % Chg Prev. New % Chg

Tier I Gold Producers

AngloGold Ashanti ANG RH SP to O R214.27 R200.00 R250.00 25% 17% R200.76 R242.13 21% R1.04 R1.91 84%

Barrick Gold ABX SW SP $15.18 $12.50 $16.00 28% 5% $8.98 $9.90 10% $0.94 $1.25 33%

Gold Fields GFI RH SP R59.39 R53.00 R62.00 17% 4% R58.25 R67.17 15% R0.09 R0.24 n.m.

Goldcorp GG SW SP to U $17.11 $12.00 $16.50 38% -4% $9.15 $11.45 25% $0.50 $0.86 71%

Kinross Gold KGC SW SP to O $3.91 $3.50 $4.75 36% 21% $2.03 $2.69 32% $0.45 $0.49 10%

Newcrest Mining NCM PH U A$17.53 A$12.00 A$13.50 13% -23% A$9.54 A$11.60 22% A$0.71 A$0.78 10%

Newmont NEM SW SP $29.10 $25.00 $34.00 36% 17% $14.33 $17.73 24% $1.53 $2.17 42%

Average 27% 5% 21% 42%

Tier II Gold Producers

Acacia Mining ACA TB O £2.88 £2.85 £3.45 21% 20% £3.21 £3.90 21% $0.26 $0.45 75%

Agnico-Eagle AEM SW O $38.47 $34.00 $42.00 24% 9% $25.91 $28.89 12% $1.90 $2.41 27%

Alamos Gold AGI DR SP $6.17 $5.00 $6.50 30% 5% $4.78 $5.61 17% $0.28 $0.39 39%

B2Gold BTO SC O C$2.16 C$2.50 C$3.00 20% 39% C$1.87 C$2.22 19% $0.16 $0.20 28%

Centamin CEY RH SP - Spec £1.00 £0.60 £0.80 33% -20% £0.66 £0.79 20% $0.08 $0.12 57%

Centerra Gold CG SW SP C$6.31 C$8.00 C$8.50 6% 35% C$9.77 C$9.34 -4% $0.53 $0.76 43%

Detour Gold DGC DR O C$22.99 C$23.00 C$27.00 17% 17% $14.81 $16.72 13% $0.86 $1.07 26%

Eldorado Gold EGO DR O $3.40 $3.00 $3.50 17% 3% $2.73 $2.97 9% $0.19 $0.24 23%

Evolution Mining EVN CK U A$1.68 A$1.20 A$1.30 8% -22% A$0.65 A$0.73 13% A$0.26 A$0.28 5%

IAMGOLD IAG DR U $2.52 $2.25 $2.75 22% 9% $1.97 $2.71 38% $0.20 $0.25 29%

New Gold NGD DR SP $4.15 $3.75 $4.25 13% 2% $2.84 $3.42 21% $0.33 $0.39 18%

Northern Star NST PH SP A$3.67 A$3.20 A$3.60 13% -2% A$2.57 A$2.85 11% A$0.46 A$0.49 6%

OceanaGold OGC CK SP A$3.91 A$3.00 A$3.50 17% -10% A$2.66 A$3.19 20% $0.29 $0.36 24%

Polymetal POLY TB O £6.90 £5.60 £7.50 34% 9% £3.63 £6.15 69% $0.69 $0.91 32%

Randgold Resources RRS TB SP £66.35 £51.00 £58.00 14% -13% £35.36 £39.05 10% $3.14 $4.10 31%

Regis Resources RRL CK SP A$2.35 A$2.10 A$2.30 10% -2% A$1.83 A$1.93 6% A$0.29 A$0.31 8%

Sibanye Gold SGL RH SP R54.99 R45.00 R48.00 7% -13% R46.90 R55.25 18% R2.83 R4.15 47%

Yamana Gold AUY DR SP $3.59 $2.75 $4.00 45% 11% $2.45 $3.26 33% $0.31 $0.41 33%

Average 19% 4% 19% 31%

Tier III Gold

Alacer Gold ASR DR SP C$2.68 C$3.25 C$3.25 0% 21% $1.47 $1.78 21% $0.20 $0.23 12%

Argonaut Gold AR SC O C$2.22 C$2.00 C$3.00 50% 35% C$2.85 C$3.26 14% $0.14 $0.20 43%

Beadell BDR CK SP A$0.29 A$0.20 A$0.30 50% 3% A$0.26 A$0.33 29% A$0.06 A$0.08 37%

Dundee Precious Metals DPM SC O C$2.21 C$2.50 C$3.00 20% 36% C$4.70 C$4.80 2% $0.17 $0.19 11%

Guyana Goldfields GUY SC O - Spec C$5.41 C$5.00 C$7.00 40% 29% C$5.10 C$6.82 34% C$0.64 C$0.81 27%

Klondex Mines KDX SC O - Spec C$3.92 C$4.00 C$5.00 25% 28% C$3.42 C$4.39 29% $0.16 $0.23 46%

Newmarket Gold NMI SW O C$2.92 C$2.75 C$3.50 27% 20% C$2.07 C$2.68 29% $0.25 $0.21 -17%

Perseus PRU CK SP A$0.41 A$0.30 A$0.40 33% -2% A$0.50 A$0.63 26% A$0.01 A$0.01 73%

Primero Mining PPP DR O $1.84 $2.25 $3.00 33% 63% $3.23 $3.59 11% $0.27 $0.30 9%

Resolute Mining RSG CK SP A$0.64 A$0.46 A$0.60 31% -6% A$0.25 A$0.37 47% A$0.23 A$0.24 9%

SEMAFO SMF DR R R R R R R R R R R R R

Silver Lake SLR CK O - Spec A$0.32 A$0.50 A$0.60 20% 85% A$0.46 A$0.57 24% A$0.08 A$0.08 5%

Silver Standard SSRI DR SP $6.28 $6.00 $7.50 25% 19% $4.62 $5.43 18% $0.63 $0.79 25%

Tahoe Resources THO SW SP C$14.75 C$13.00 C$15.00 15% 2% C$9.91 C$10.06 2% $0.48 $0.57 21%

Teranga Gold TGZ SW SP C$0.79 C$0.70 C$0.90 29% 14% C$0.52 C$0.72 39% $0.06 $0.10 71%

Timmins Gold TMM SC U C$0.33 C$0.20 C$0.25 25% -23% C$0.22 C$0.25 14% $0.08 $0.13 68%

Average 28% 22% 23% 29%

Source: RBC Capital Markets estimates


April 10, 2016 3

Exhibit 2: Price target change summary

Current Target (12 month) Implied Rt. NAV/shr AdjCFPS

Company Ticker Analyst Rating Price Prev. New % Chg to Target Prev. New % Chg Prev. New % Chg Comments

Royalty Companies

Franco-Nevada FNV SW O C$84.77 C$91.00 C$98.00 8% 16% C$36.03 C$43.46 21% $2.29 $2.35 3%

Osisko Gold Royalties OR DR O C$14.26 C$18.00 C$18.00 0% 26% C$11.88 C$12.04 1% C$0.51 C$0.54 6% Stronger CAD on translation of USD NAV

Royal Gold RGLD SW O $52.75 $44.00 $60.00 36% 14% $25.45 $27.50 8% $3.21 $3.10 -4%

Sandstorm Gold SSL DR O - Spec C$4.63 C$5.00 C$5.00 0% 8% $2.08 $2.34 13% $0.28 $0.30 8% Stronger CAD on translation of USD NAV & 2016 guidance

Silver Wheaton SLW DR O $16.50 $20.00 $21.00 5% 27% $8.91 $9.68 9% $1.27 $1.27 0%

Average 10% 18% 10% 3%

Silver Companies

Fresnillo FRES TB SP to U £9.33 £6.10 £7.50 23% -20% £5.30 £5.88 11% $0.54 $0.64 18%

Hecla Mining HL DR SP $2.96 $2.50 $3.25 30% 10% $1.72 $1.99 16% $0.28 $0.41 48%

Hochschild Mining HOC TB O £1.13 £0.55 £1.30 136% 15% £0.52 £0.84 60% $0.04 $0.23 n.m.

Pan American Silver PAAS DR SP $11.98 $8.00 $12.00 50% 0% $7.26 $9.38 29% $0.43 $0.80 86%

Tahoe Resources THO SW SP C$14.75 C$13.00 C$15.00 15% 2% C$9.91 C$10.06 2% $0.48 $0.57 21%

Average 51% 1% 24% 43%

Emerging Gold Producers

Asanko Gold AKG DR O - Spec C$3.18 C$3.00 C$3.25 8% 2% $2.12 $2.45 15% n.a. n.a. n.a.

Aureus AUE SW R R R R R R R R R n.a. n.a. n.a.

Continental Gold CNL DR O - Spec C$2.07 C$3.75 C$3.00 -20% 45% $2.59 $2.24 -13% n.a. n.a. n.a. Increased implied equity dilution given lower share price

Dalradian DNA SW O - Spec C$0.95 C$1.40 C$1.50 7% 58% C$2.02 C$2.19 9% n.a. n.a. n.a.

Gold Road Resources GOR CK O - Spec A$0.47 A$0.60 A$0.60 0% 29% A$0.58 A$0.68 17% n.a. n.a. n.a.

Lundin Gold LUG SC O - Spec C$5.83 C$5.00 C$5.50 10% -6% C$4.22 C$5.07 20% n.a. n.a. n.a.

Midas Gold Corp. MAX SW SP - Spec C$0.58 C$0.40 C$0.50 25% -14% C$0.21 C$0.31 47% n.a. n.a. n.a.

NovaGold Resources NG SW SP - Spec C$7.51 C$6.00 C$8.00 33% 7% C$6.00 C$8.00 33% n.a. n.a. n.a.

Pilot Gold PLG DR O - Spec C$0.56 C$0.50 C$0.60 20% 7% $0.39 $0.46 19% n.a. n.a. n.a.

Premier Gold Mines Ltd. PG SC O - Spec C$3.28 C$4.00 C$4.50 13% 37% C$3.69 C$4.46 21% n.a. n.a. n.a.

Pretium PVG DR SP - Spec C$7.84 C$11.00 C$12.00 9% 53% C$10.56 C$12.38 17% n.a. n.a. n.a.

Roxgold ROG DR O - Spec C$0.91 C$1.10 C$1.10 0% 21% C$1.12 C$1.09 -3% n.a. n.a. n.a. Stronger CAD on translation of USD NAV

Sabina Gold & Silver SBB SC SP - Spec C$0.95 C$0.80 C$1.25 56% 32% C$0.77 C$1.24 60% n.a. n.a. n.a.

Torex Gold TXG DR O - Spec C$1.79 C$2.00 C$2.25 13% 26% $1.38 $1.51 10% n.a. n.a. n.a.

Average 13% 23% 19% n.m.



April 10, 2016 4

H2/2016 expectations: Gold price volatility with upside for gold equities We have increased our 2016 average gold price assumption by 9% from $1,150/oz to $1,250/oz, our 2017 forecast 8% from $1,200 to $1,300 and our flat long term forecast 4% from $1,250/oz to $1,300/oz. Our silver price estimate remains unchanged at $15.5/oz in 2016, $16.50/oz in 2017 and $17.50/oz in 2018 and long term (Exhibit 3). We see a number of positive factors providing steady fundamental demand for physical gold. These include fundamental investment and jewelry demand from China and India, systematic central bank purchases, and new demand from the global physical gold ETFs.

Exhibit 3: $1,250/oz gold in 2016 and a step-up to $1,300/oz in 2017 and long term

Q1/16 A/E Q2/16E Q3/16E Q4/16E 2016E 2017E 2018E LT

Gold ($/oz)

New $1,185 $1,250 $1,275 $1,300 $1,250 $1,300 $1,300

Previous $1,150 $1,150 $1,150 $1,150 $1,150 $1,200 $1,250

% Change 3% 9% 11% 13% 9% 8% 4%

Silver ($/oz)

New $15.50 $15.50 $15.50 $15.50 $15.50 $16.50 $17.50

Previous $15.50 $15.50 $15.50 $15.50 $15.50 $16.50 $17.50

% Change 0% 0% 0% 0% 0% 0% 0%


We believe the macro environment is more favorable for gold with the Fed taking a more dovish view on monetary policy and the market subsequently discounting in a single rate hike in 2016. A macro backdrop with a dovish Fed outlook, declining USD real rates, global central bankers looking to negative real rates for economic stimulus and steady fundamental demand for physical gold has resulted in our more positive outlook for the gold price. We expect to see a broad $1,200/oz to $1,325/oz trading range for gold for the balance of 2016 and early 2017. While gold prices may languish near-term in the seasonally quiet May and June period, we continue to expect a seasonal rally in gold in August and September as well as a period of seasonal demand strength in late 2016 and early 2017. In our January 6

th report

1 we highlighted how gold performed around a Fed rate hike cycle,

noting that in the 3 most recent Fed hiking cycles, not followed by a recession (i.e., 1987, 1994 & 2004), gold rallied 12-18 months post the initial rate hike.

To hold gold above $1,200/oz and rally above $1,300/oz as forecast, we would expect to see (1) continued fundamental demand out of China and India; (2) central banks maintain their systematic buying; and (3) net gold ETF weekly inflows or at least no significant liquidation. Growing inflationary expectations in the US may provide price support, although weak economic data from China, Europe and the EM world in general, remain a concern for commodity prices in general.

A Q1/16 relief rally, that was enhanced by new gold ETF inflows As expected, gold rebounded in Q1/16 after the initial Fed rate hike announcement in December. What we did not expect was the dovish tone from Fed Chairperson Yellen late in the quarter. The difference in Q1/16, versus prior Q1 seasonal gold rallies, was the new flows into the physical gold ETFs. Exhibit 4 shows the daily global net purchases or sales of the physical gold ETF holdings and there was clearly a greater level of ETF purchases in early

1 Global Gold Outlook: Building a Fundamental Base for Gold into a Rate Hike Cycle. Walker et al, January 6, 2016.

Uncertainty around the next Fed rate hike is expected to provide a floor for the gold price.


April 10, 2016 5

2016, versus prior Q1 seasonal demand periods, and a sharp increase in buying volumes as gold broke through the $1,220/oz level. In our view, to maintain gold above $1,200/oz it is important that there be minimal liquidation of the gold ETF holdings to allow a new, higher trading range to be established. However, should we continue to see inflows or buying on pullbacks as was observed in the 2005 to 2007 period, we believe gold prices should continue to rally, albeit at a measured pace (see Exhibit 9).

Exhibit 4: Recent daily gold ETF flows suggest an accumulation trend that is constructive for gold

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16

ETF Ho

ldin

gs Ch

ange (M

Mo

z)G

old

Pri

ce (

$/o

z)

Change in ETF Total Known Holdings (Moz) Daily Gold Price (US$/oz)

TaperingExpected

Taperingannounced

1st Fedrate hike

Source: Bloomberg, RBC Capital Markets estimates


April 10, 2016 6

Increasing beta offers opportunities for gold equities The beta for the GDX (large cap gold companies) and GDXJ (smaller cap gold companies) versus the gold price have risen by over 40% since early 2013. The GDX beta has increased from an average of 1.24 in 2011 to 2.11 in 2016 and the GDXJ beta has increased from 1.54 to 2.10 (Exhibit 5). The increase in the beta of gold equities is a result of both the operating leverage and financial leverage for gold producers at lower gold prices. Over this period the beta for the smaller cap GDXJ has been ~23% higher than the GDX, which is warranted given the greater operating leverage and reduced trading liquidity for junior gold companies.

Given the higher beta for the gold equities, if we see firmer gold prices during 2016 as expected, we believe that investors should look buy the equities on pullbacks, given our expectations of or seasonal weakness in May and June and with a dovish Fed outlook.

Exhibit 5: Gold equity betas versus the gold price

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

0.00

0.50

1.00

1.50

2.00

2.50

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Go

ld P

rice

Bet

a to

Go

ld

GDX GDXJ Gold

Source: Bloomberg, RBC Capital Markets

We have seen the trading beta of the gold producers to the underlying commodity increase to 1.91 on average. Since the start of 2016, the companies that have exhibited the greatest beta to gold price moves have been EGO, KGC, BTO, AUY, NGD and RRL due to elevated operating and financial leverage or company-specific factors. At the other end of the spectrum, companies with lower beta to moves in the gold price include all the royalty and streaming companies as well as NEM, AEM, AU, NCM, ACA and GFI.

Higher beta suggests improved returns by trading gold equities.


April 10, 2016 7

Upside and downside catalysts for our gold price forecast

Upside catalysts for the gold price There are a number of potential positive catalysts for the gold price including:

1. As softening outlook for the US economy in 2017 and the Fed maintaining its dovish posture;

2. A sharp rise in geopolitical risk in the Middle East/SE Asia. A similar period occurred in 2005 and gold rallied with the US dollar;

3. Further evidence that negative real bond yields and negative real rates are increasing; and

4. Increasing financial systemic risk (2007 sub-prime crisis) or a Black Swan event (GFC 2008-2009) would result in fund flows back into gold and US dollar.

One or a combination of these factors could contribute to an upside scenario that could result in gold to trading in a $1,250/oz to $1,350/oz range in H2/16. We believe this scenario could have a 25% probability.

Downside catalysts for the gold price There are a number of potential negative catalysts for the gold price including:

1. The FOMC commentary becomes more hawkish and the pace of rate hikes increases. And/or if inflation expectations decline and real rates begin to rise.

2. Combined the central banks of China and Russia are ~10% of the global gold demand and any significant moderation of this trend would have a negative impact.

3. Significant weakness in EM currencies could trigger liquidation of currency/gold reserves. This happened during the 1998 “Asian Tiger” currency crisis, when gold scrap sales helped push gold to a $257/oz low in 1999.

4. Liquidation of the gold ETF positions remains a risk, given the inflows in Q1/16, as observed in Q2/13 and Q3/13.

One or a combination of these factors could contribute to a downside scenario that could result in gold to trading in a $1,100/oz to $1,200/oz range in H2/16. We believe this scenario could have a 25% probability.

Drivers for our $1,300 gold price assumption in 2017 We assume the gold price to improve to trade above $1,300/oz late 2016 and early 2017. Our assumptions are:

1. Given the current weakness of the European and Chinese economies, we expect the Fed to lean toward a dovish monetary policy and low real rates to avoid any chance the US economy could stall.

2. The market expectations of one rate hike in 2016 are maintained. 3. Increase in number of jurisdictions that are seeing negative interest rates as central

banks (ex-USA) continue accommodative policies. 4. China, Russia and other EM central banks maintain on going gold purchases. 5. Global gold ETF holdings remain stable at +52 Moz (currently 58.7 Moz) and scrap gold

supply remains at current low levels. 6. Whilst we expect emerging market currencies to remain weak, we do not expect

anything similar to 1998 Asian currency crisis and associated gold liquidation event.


April 10, 2016 8

Gold price performance in a declining real rate environment

Negative real rates becoming a positive catalyst The gold price has a strong negative correlation with real interest rates (Exhibit 6) and is slightly negative beta to the broader equity markets. The relationship with real rates has broken down several times over the past decade as both treasury yields and gold prices have fallen with funds flowing into US denominated securities, it was further impacted after the ECB’s adoption of its negative real rate strategy. US denominated real rates have again begun to decline as the Fed signalled that near term hike rates are on hold.

Exhibit 6: Gold price weakens as real rates rise

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15

10 Y

ear T

IPS

Yie

ld (%

)

Go

ld P

rice (

$U

S/o

z)

Gold Price 10-Year TIPS Yield (%)

Source Bloomberg

In our January 6, 2016, Global Gold Outlook we examined the performance of gold equities in the 12 months prior to and the 24 months following the first Fed rate hike in the past nine monetary tightening. In summary we note that:

In the three hiking cycles with no subsequent recession (1987, 1994 and 2004), gold and gold equities performed favourably into the rate hike cycle; then performance was flat after the initial rate hike was announced and then recovering 12-18 months into the cycle. We believe these three cycles are similar to the current rate hike cycle, with the exception of the current pause in hikes.

Volatility expected to continue. Late last year we argued that the market has discounted 100 bps of rate hikes into a $1,075 to $1,100 gold price range.

We also expect gold price and gold share price volatility to continue, given the contrast between US economic data that supports a degree of monetary tightening and the global economic data (ex-US) that suggests the need for an accommodative monetary policy, with the potential for inflation expectations to rise in these regions.

Inflation is not expected to be a catalyst Gold has typically performed well into a US rate increase; strengthening in the 12 months prior to every rate hike since the end of Bretton Woods in 1971, aside from 1999. Since 1970, however, the Fed has not raised rates when CPI has been below 2% and on all but one occasion (February 1994) the direction of CPI over the previous 12 months had been on an upward trajectory prior to the first hike. In the current rate hike cycle inflation is more muted. The US CPI was 0% in June 2015 but increased to 1.4% in February 2016. As such, we do not expect inflation expectations to be significant near term catalyst for the gold price.

Gold has outperformed in the three most recent hike cycles not followed by a recession.


April 10, 2016 9

As mentioned previously, in the presence of lackluster economic growth from the European economies, China and the EM world in general, we would expect inflationary expectations to remain weak. Exceptions may occur with sustained negative real rates and US dollar strength where weaker currencies/economies would be importing US dollar inflation. We believe this is unlikely in the current low energy and commodity price environment.

Seasonal trends offer trading opportunities After the seasonal rally in Q1/16, we expect gold price to weaken into May and June and then rebound into stronger demand from the Indian Sub-continent in August and September ahead of the Indian festive period and Diwali. We would also expect a rally in the year-end 2016 restocking period in NA/Europe and the seasonally strong demand period for gold ahead of Chinese New Year in early 2017 (Exhibit 7). In 2015, we estimate nearly 20% of global retail/investment demand for gold came from India and 25% came from China. With the Rupee and RMB weakness, and sharply high domestic gold prices in these regions we could see imports decline as “price-sensitive” buyers delay purchases and look for price weakness.

Exhibit 7: Gold is entering a seasonally weak period in May and June, followed by improved returns in both August & September and around year-end holiday periods.

-2%

-1%

0%

1%

2%

3%

4%

5%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Seasonality of Gold Returns

Average Gold Monthly Returns Since 1980

Average Gold Monthly Returns Since 2001

-5%

-3%

-1%

1%

3%

5%

7%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Seasonality of TSX Gold Index Returns

Average TSX Gold Index Monthly Returns Since 1980

Average TSX Gold Index Monthly Returns Since 2001

Source: Bloomberg data


April 10, 2016 10

US investment demand remains a key driver for gold prices

A pickup in gold ETF demand has been a positive Q1/16 factor The global physical gold ETF holdings peaked at 84.3M oz in early 2013. Since then we have seen steady liquidation to the 47.2M oz level at the end of December 2015 and in Q1/16 the global holdings rebounded to 56.7M oz. We estimate that the weighted average purchase price for the current ETF holdings is likely in the $800 to $850/oz range. As highlighted in Exhibit 4, in Q1/16 there were sustained inflows into the global ETF’s which benefited the gold price.

At a macro level, Exhibit 8 shows the impact on the gold price of the flows into and out of the US listed physical gold ETF (GLD). Base gold demand into the US as jewellery, electronics and coins is approximately 200 tonnes a year or 5% of global demand. What changed in 2004 was the creation of the GLD ETF, this provided investors with direct exposure to physical gold, in addition to the gold equities. We believe this new source of global demand was a key contributor to the steady outperformance of gold from 2005 to 2007, when gold rallied from $400 to $850/oz with a price trend of “higher lows”. Post the sub-prime crisis in 2007 and global financial crisis, the sharp jump in flows was driven by the Fed’s QE program.

Exhibit 8: The net additions or sales of the US listed physical gold ETF holdings is an important driver for higher gold prices

131.9 130 108 94.5 77 63 66 60.3 53.7 61.4 63.8 76.7 76.7

2%

4%5%

4% 4%

8%

3%

-1%

2%

-13%

-2%-2%

2%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

-600

-400

-200

0

200

400

600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016EG

old

Pri

ce (

US$

/oz)

Go

ld D

em

and

(t)

GLD ETF Flows Bar Hoarding Official Coins Electronics Jewellery Gold Price

Source: Comex, Bloomberg

Speculative flows have a near term impact on gold prices The net speculative position for gold on Comex has spiked to a near term peak of 20.7M oz as of April 8

th, 2016 (Exhibit 9). As observed in the past, with the Comex speculative long

positions at these elevated levels there is a high probability of gold price correction as traders take profits. Given the upcoming seasonally weak demand period and overly long position of the speculative market we would not be surprised to see a correction in the gold price down to a $1,190 to $1,200/oz range. Key for higher gold prices would be gold ETF inflows, and to sustained gold prices at these levels there needs to be minimal outflows of the ETF holdings.


April 10, 2016 11

Exhibit 9: The physical gold ETF holdings and speculative interest rebounded in early 2016

0

10

20

30

40

50

60

70

80

90

100

110

120

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Go

ld O

un

ce

s (

MM

oz)

Go

ld P

ric

e (

US

$/o

z)

ETF Holdings Net Speculative Position Gold Price

56.7 MMoz

20.7 MMoz

Source: Comex, Bloomberg

Most of the current ETF holdings were likely bought sub-$1,000/oz

QE1

QE2

QE3

Tapering announced


April 10, 2016 12

Demand drivers: steady central bank and Chinese/Indian demand

Positive impact from central bank buying A significant positive impact on the gold market occurred when the European central banks stopped selling gold in 2009 after 18 years of sales. Since then Emerging Market central banks beginning to accumulate gold (Exhibit 10). Central banks that have been most active in increasing their holdings of gold include China, Russia, Mexico, South Korea, Russia and India.

Central bank gold demand remained steady in 2015 with an estimated 483 tonnes of demand, in line with the 466t of demand in 2014. China and Russia continue to be the largest components of demand with an estimated 10% of global demand coming from these two central banks. China has continued its additions of 16t to 19t tonnes a month as reported by SAFE

2 which would annualize at 6% of global demand. Chinese gold holdings at the central

bank reserve level at the end of 2015 were estimated to be 1,762t, which would represent an estimated 1.7% of the foreign exchange holdings. We have also seen robust purchasing from Russia of approximately 162t in 2015, as well as small increases from Kazakhstan, Jordan, Ukraine and the UAE.

Exhibit 10: In 2009, Central Banks became net buyers of gold

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

(800)

(600)

(400)

(200)

0

200

400

600

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

E

Go

ld P

rice

(U

S$/o

z)

Ne

t P

urc

has

es

(Sal

es)

-To

nn

es

Source: GFMS, RBC Capital Markets estimates

2 SAFE - the “Chinese State Administration of Foreign Exchange”


April 10, 2016 13

Chinese demand is helping to maintain a floor price for gold Over the past two years, nearly 50% of global demand for physical gold has come from the combined Chinese markets and the Indian sub-continent. We view the consumers in both of these markets as price sensitive and have observed significant buying interest during dips in Renminbi or Rupee gold price terms. Alternatively, when the domestic prices rise in these regions, price sensitive buyers become sellers.

China became a significant component of the bullion market in 2011 when liquidity on the mainland improved. In 2013 Chinese demand absorbed most of supply of gold that was generated with the liquidation of the global gold ETF’s (Exhibit 11). In that year China consumed an estimated 1,200t or 28% of global demand, displacing India as the largest consumer of gold for the first time. We expect China to consume 25% of global supply in 2016 and China remains the world’s largest miner of gold with 458 tonnes or 15% of global mine site production

3 in 2015.

We note that the imports of gold into China through Beijing, Shanghai and Shenzhen are not being released by the government. However, data from the Swiss Customs Administration suggests that direct exports to China now account for almost 40% of total gold imports, up from almost zero in 2009, and in March 2015 the gold exports to China from refiners in Switzerland exceeded exports from Hong Kong to the mainland. The selloff in the Chinese equity markets in early Q3/15 appears to have increased the demand for gold in August and September. A weakening RMB may increasing the value of domestic holders of gold, although if this trend persists it may well have a negative impact, as it would reduce the purchasing power of Chinese consumers.

Exhibit 11: Monthly imports of gold from HK show significant increase Y/Y into 2016

0

50

100

150

200

250

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15

Go

ld Im

po

rts

(to

nn

es)

Total Monthly China Imports of Gold from Hong Kong including bars, jewellery and coins

Nov 2012 -Shanghai plans gold ETF

Mar 7, 2011- Hong Kong's Value Gold ETF created

Feb 2012- Feb 2013Year of the Dragon

Dec 2012 - China allows OTC gold trading between banks

Mar 2013 - Shanghai gold futures fetched premiums >$30/oz, making it cheaper to buy metal overseas and through ETF Purchases

~$12.5B

Sep 2011- ICBC Gold Accumulation Plan sales reach 19 tonnes

~$5B

May 2014 - Direct gold imports into Beijing started in addition to Shenzhen and Shanghai

Source: GFMS, Hong Kong Census and Statistics Department

3 GFMS – “Gold Survey 2016”.

Chinese gold demand continued through the Q3/15 equity market sell off and recent RMB price rally.


April 10, 2016 14

Impact of Renminbi moves on gold demand We have seen Chinese demand pick up sharply when the Renminbi gold price has dipped down to the 7,400/oz RMB range or ~$1,150/oz (Exhibit 12). However, the Chinese market has proven to be very price sensitive and after the August 2015 devaluation of the Renminbi it appears that the price sensitive level where buying could stall is 8,000 RMB or ~$1,240/oz. Similar buying/selling patterns can be observed for the Rupee in the INR 72k/oz to INR 80k /oz range.

Exhibit 12: Gold prices in Indian Rupee (LHS) and Chinese RMB (RHS) highlight price sensitive nature of these regions.

INR 0

INR 20,000

INR 40,000

INR 60,000

INR 80,000

INR 100,000

INR 120,000

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Go

ld P

rice

(R

UP

/oz)

Gold Price in Indian Rupee

Jan 2013: Gold import duty increased to 10%

2013: 80:20 rule implemented

2010: India constitutes 31% of global demand

2007: India's first gold ETF launched

2009: Central bank buys 200t from IMF

¥0

¥2,000

¥4,000

¥6,000

¥8,000

¥10,000

¥12,000

¥14,000

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Go

ld P

rice

(C

NY/

oz)

Gold Price in Chinese Renminbi

Liquidity Begins (2011)

Gold holdings permitted

(2005)

Source: Bloomberg data

Limited impact of Indian government import reduction schemes Indian demand has been impacted by the significant price volatility in local currency terms (Exhibit 12). In addition the government has introduced two schemes aimed at reducing gold imports and improve the country’s balance of payments. The recent introduction of the Gold Monetization Scheme by the Indian government was designed to allow citizens to deposit gold jewellery, bars and coins into a gold savings account denominated in grams of gold. The plan is designed to monetize the significant amount of gold held by Indian citizens estimated to be in excess of 650 million ounces. The gold would be deposited in banks and the holder would receive interest paid for specific deposit periods with principal and interest paid in rupees at maturity. It does not appear that this scheme has been well received given the costs associated with assaying the grades of the jewellery and physical gold. The deposit holder would also be at risk in an inflationary environment given they receive rupees upon deposit maturity.

The Gold Sovereign Bond Scheme was also proposed by the government as a means to reduce gold imports by offering a liquid investment alternative, rather than direct purchases of gold and costs associated import premium paid. If broadly accepted by the Indian population the Gold Sovereign Bond scheme could reduce gold imports, although we would not expect a significant impact on Indian gold demand over the next two to three years.

Indian government schemes struggle to reduce gold imports.


April 10, 2016 15

RBC CM gold supply and demand assumptions The following are our principal assumptions for our supply and demand model (Exhibit 13):

Supply drivers Mine production: We expect mine production to be up modestly Y/Y in 2016 as

production growth has largely levelled off. Mine closures have been limited despite a decline in gold price as companies have benefitted from lower input costs such as oil and FX for non-US producers. We expect a modest increase in production from new mines in 2016 including El Limon (Torex), Asanko Gold Mine (Asanko), Karma (True Gold), Yaramoko (Roxgold) and the ramp up of new mines such as Eleonore (Goldcorp), Aurora (Guyana Goldfields) and Otjikoto (B2Gold).

Scrap: We believe scrap supply will increase marginally in 2016. While a lower gold price may discourage investors from monetizing gold as scrap in US dollar terms, an increase in gold price in EM currency terms may result in a pickup in gold scrap supply.

Net hedging: Gold producers appear to be warming up to hedging gold production with option trading strategy. Australian producers have taken advantage of the strong Aussie dollar and attractive investment rates to lock in forward sales.

Rather than lock in gold prices, we believe companies are more likely to enter into hedges to lock in lower oil prices and weaker non-USD currencies to preserve a lower cost structure.

Demand drivers Jewellery demand: We believe jewellery demand may be constrained as weakening

global macroeconomic factors restrict growth in discretionary spending. Chinese jewellery demand declined in 2015 and that may continue due to weaker economic growth, and concerns for demand continue in India after consecutive weak monsoon seasons negatively impacted crops. Russian demand has also decreased materially due to significantly weaker purchasing power and declining consumer confidence.

Other fabrication for electronics purposes is expected to remain flat after several favourable years.

Physical demand: We believe physical demand may strengthen in 2016 due to increased retail investment, which continues to utilize gold as a store of value against domestic currency depreciation. Demand has increased Europe in 2015 and physical demand surged in China in Q3/15 due to the depreciation of the RMB in August. We believe the potential for continued depreciation in China and relatively easy monetary policy outside of the US will continue to induce retail investors to serve as a support for physical demand.

Official sector purchases: We believe central banks will continue to remain net purchasers of gold in 2016, underpinned by purchases from China and Russia. Purchases from the PBoC have accounted for ~6% of total gold demand on an annualized basis and Russia at 4% has steadily accumulated gold over the past 4 years. Both countries appear to be looking to diversify away from the US dollar exposure.

ETF/Exchange: We believe the net ETF/exchange outflows over the past few years may continue, albeit at a much slower pace than previous years. Net ETF holdings of 47.5 Moz are currently at levels not seen since early 2009 when the gold price was trading under $1,000/oz.


April 10, 2016 16

Exhibit 13: Gold supply and demand

GFMS Reports

Metric Tonnes 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016ESUPPLY

Mine production 2,561 2,496 2,499 2,429 2,612 2,742 2,846 2,875 3,061 3,133 3,158 3,175 Net official sector sales 663 365 484 235 34 -

Old gold scrap 903 1,133 1,006 1,352 1,728 1,713 1,675 1,677 1,287 1,125 1,173 1,200 Net producer hedging - - - - - - 18 - - 103 (24) 25

- Total Supply 4,127 3,994 3,989 4,016 4,374 4,455 4,539 4,552 4,348 4,361 4,307 4,400

DEMANDFabrication

Jewellery 2,722 2,302 2,426 2,308 1,819 2,033 2,034 2,008 2,439 2,213 2,166 2,100 Other Fabrication 449 480 487 471 422 476 468 426 419 400 361 410

Total Fabrication 3,171 2,782 2,913 2,779 2,241 2,509 2,502 2,434 2,858 2,613 2,527 2,510 Physical bar/coin investment 416 428 436 916 830 1,221 1,556 1,343 1,775 1,079 1,115 1,200

Net producer de-hedging 92 434 432 357 234 106 - 40 39 - - - Net official sector purchases - - - - - 77 457 544 409 466 483 475

ETF/Exchange 237 292 253 355 662 436 179 269 (978) (159) (124) (50) OTC Flows 211 58 (45) (391) 407 106 (155) (78) 245 362 306 265

Total Demand 4,127 3,994 3,989 4,016 4,374 4,455 4,539 4,552 4,348 4,361 4,307 4,400

Gold Price (London PM, US$/oz) $444 $604 $695 $872 $972 $1,225 $1,572 $1,669 $1,412 $1,266 $1,160 $1,250

Source: RBC Capital Markets estimates, GFMS historical data, adjusted to reflect 100t/year of purchases by PBOC post 2010


April 10, 2016 17

Technical outlook for Gold We highlight key points from Technical Analysis by RBC Technical Analyst Javed Mirza.

4

Commercial Hedger positions suggest an intermediate-term price peak is building in Gold In December we noted that an intermediate-term (three to six months) low was in place

for Precious Metals and Copper (see TSX - Gold & Copper forging intermediate-term low, December 13th, 2015).

Commercial hedger positions on Gold are now AT relative extreme short positions coincident with prior intermediate-term price peaks in Gold. The typical duration of these intermediate-term moves from relative extreme commercial hedger positions has been two to three months.

This suggests that the ongoing rally is likely to stall, and that pending weakness over the next two to three months should present a more attractive entry point.

Upside targets on this rally are near the recent highs at 1,287, followed by the January highs at 1,308. A close above 1,308 would be a strong technical positive and sees next upside technical target near the August 2013 highs at 1,428.

4 Javed Mirza can be contacted at (416) 842-8744 or [email protected]


April 10, 2016 18

https://www.rbcinsight.com/CM/Share/ResearchViewer/?SSS_A41BA0069463741F499720EB9C9C791C

mailto:[email protected]

Exhibit 14: Summary of estimates changes

2015A/E EPS 2016E EPS 2017E EPS 2015A/E CFPS 2016E CFPS 2017E CFPSCompany Ticker Analyst Rating Previous New Previous New Previous New Previous New Previous New Previous NewTier I Gold Producers

AngloGold Ashanti ANG RH O $0.12 $0.12 $0.49 $1.19 $1.26 $1.91 $2.62 $2.62 $2.77 $3.43 $3.32 $3.93Barrick Gold ABX SW SP $0.30 $0.30 $0.30 $0.52 $0.47 $0.70 $2.14 $2.14 $1.84 $2.16 $2.00 $2.31Gold Fields GFI RH SP ($0.31) ($0.31) $0.08 $0.28 $0.34 $0.53 $0.90 $0.90 $0.86 $0.99 $1.08 $1.19Goldcorp GG SW U $0.07 $0.07 ($0.03) $0.25 $0.20 $0.46 $1.73 $1.73 $1.38 $1.75 $1.66 $2.01Kinross Gold KGC SW O ($0.08) ($0.08) ($0.06) $0.07 $0.06 $0.19 $0.69 $0.69 $0.79 $0.84 $0.71 $0.85Newcrest Mining NCM PH U $0.55 $0.55 $0.22 $0.29 $0.44 $0.69 $1.67 $1.67 $1.08 $1.15 $1.27 $1.53Newmont NEM SW SP $0.99 $0.99 $0.47 $1.08 $1.02 $1.60 $4.71 $3.35 $3.68 $3.68 $4.78 $4.62

Tier II Gold ProducersAcacia Mining ACA TB O $0.02 $0.02 $0.20 $0.34 $0.32 $0.45 $0.21 $0.21 $0.70 $0.89 $0.90 $1.09Agnico-Eagle AEM SW O $0.44 $0.44 $0.10 $0.48 $0.60 $0.91 $3.05 $3.05 $3.00 $3.51 $3.50 $3.92Alamos Gold AGI DR SP ($0.28) ($0.28) ($0.12) ($0.02) ($0.04) $0.06 $0.15 $0.15 $0.42 $0.53 $0.55 $0.67B2Gold BTO SC O $0.01 $0.01 $0.01 $0.05 $0.05 $0.09 $0.17 $0.17 $0.22 $0.26 $0.26 $0.31Centamin CEY RH SP - Spec $0.07 $0.04 $0.07 $0.12 $0.07 $0.09 $0.15 $0.14 $0.15 $0.20 $0.14 $0.17Centerra Gold CG SW SP $0.37 $0.37 $0.16 $0.41 $0.31 $0.52 $1.28 $1.28 $1.00 $1.25 $1.30 $1.50Detour Gold DGC DR O ($0.25) ($0.25) ($0.08) $0.11 $0.33 $0.52 $0.78 $0.78 $1.11 $1.33 $1.67 $1.92Eldorado Gold EGO DR O $0.02 $0.02 $0.01 $0.06 $0.08 $0.13 $0.27 $0.27 $0.29 $0.34 $0.42 $0.48Evolution Mining EVN CK U A$0.14 A$0.14 A$0.17 A$0.19 A$0.19 A$0.25 A$0.29 A$0.29 A$0.33 A$0.35 A$0.35 A$0.41IAMGOLD IAG DR U ($0.51) ($0.51) ($0.27) ($0.13) ($0.16) $0.02 $0.06 $0.06 $0.39 $0.51 $0.60 $0.75New Gold NGD DR SP ($0.02) ($0.02) ($0.11) ($0.08) ($0.09) ($0.02) $0.42 $0.42 $0.44 $0.44 $0.41 $0.47Northern Star NST PH SP A$0.21 A$0.21 A$0.28 A$0.30 A$0.37 A$0.47 A$0.61 A$0.61 A$0.62 A$0.65 A$0.66 A$0.76OceanaGold OGC CK SP $0.19 $0.19 $0.12 $0.17 $0.23 $0.29 $0.28 $0.28 $0.39 $0.46 $0.58 $0.66Polymetal POLY TB O $0.45 $0.52 $0.49 $0.90 $0.57 $0.95 $1.12 $1.31 $1.06 $1.31 $1.18 $1.41Randgold Resources RRS TB SP $2.03 $2.03 $1.83 $2.65 $2.49 $3.31 $4.14 $4.14 $4.23 $5.19 $4.95 $5.91Regis Resources RRL CK SP A$0.17 A$0.17 A$0.18 A$0.20 A$0.19 A$0.26 A$0.28 A$0.28 A$0.34 A$0.36 A$0.32 A$0.39Sibanye Gold SGL RH SP R0.79 R0.79 R3.81 R5.50 R5.38 R7.12 R4.59 R4.59 R7.58 R8.90 R10.59 R11.95Yamana Gold AUY DR SP ($0.08) ($0.08) $0.05 $0.15 $0.12 $0.22 $0.59 $0.59 $0.58 $0.70 $0.66 $0.77

Tier III Gold ProducersAlacer Gold ASR DR SP $0.17 $0.17 $0.09 $0.14 $0.09 $0.11 $0.40 $0.40 $0.24 $0.30 $0.25 $0.27Argonaut Gold AR SC O ($0.13) ($0.01) ($0.06) ($0.01) ($0.04) $0.01 $0.27 $1.55 $0.26 $0.32 $0.30 $0.36Beadell BDR CK SP (A$0.01) (A$0.01) A$0.04 A$0.05 A$0.04 A$0.06 A$0.04 A$0.04 A$0.07 A$0.09 A$0.07 A$0.08Dundee Precious Metals DPM SC O $0.10 ($0.03) $0.04 $0.11 $0.28 $0.40 $0.54 $0.58 $0.39 $0.40 $0.67 $0.71Guyana Goldfields GUY SC O - Spec (C$0.00) (C$0.06) C$0.37 C$0.50 C$0.43 C$0.61 C$0.06 (C$0.22) C$0.66 C$0.83 C$0.88 C$1.13Klondex Mines KDX SC O - Spec $0.13 $0.10 $0.18 $0.19 $0.32 $0.36 $0.36 $0.33 $0.35 $0.38 $0.54 $0.62Newmarket Gold NMI SW O $0.17 $0.17 $0.37 $0.39 $0.38 $0.42 $0.36 $0.35 $0.55 $0.54 $0.55 $0.56Perseus* PRU CK SP A$0.12 A$0.12 (A$0.04) (A$0.02) A$0.02 A$0.07 A$0.16 A$0.16 A$0.02 A$0.04 A$0.14 A$0.20Primero Mining PPP DR O $0.01 $0.01 ($0.02) $0.02 $0.12 $0.17 $0.47 $0.47 $0.63 $0.67 $0.80 $0.85Resolute Mining RSG CK SP A$0.09 A$0.09 A$0.20 A$0.21 A$0.18 A$0.23 A$0.10 A$0.10 A$0.27 A$0.29 A$0.24 A$0.30SEMAFO SMF DR R R R R R R R R R R R R RSilver Lake SLR CK O - Spec (A$0.00) (A$0.00) A$0.03 A$0.03 A$0.06 A$0.08 A$0.06 A$0.06 A$0.11 A$0.12 A$0.14 A$0.17Silver Standard SSRI DR SP ($0.13) ($0.13) ($0.01) $0.20 $0.29 $0.48 $0.86 $0.86 $0.96 $1.18 $0.99 $1.16Tahoe Resources THO SW SP $0.51 $0.55 $0.37 $0.43 $0.45 $0.52 $0.90 $0.96 $0.91 $0.95 $1.06 $1.14Teranga Gold TGZ SW SP $0.06 $0.06 $0.02 $0.05 $0.02 $0.05 $0.12 $0.12 $0.10 $0.14 $0.08 $0.13Timmins Gold TMM SC U ($0.06) ($0.05) ($0.00) $0.71 ($0.00) $0.63 $0.02 $0.02 $0.07 $0.81 $0.00 $0.64

* Represents fiscal year ended June 30 Source: RBC Capital Markets estimate


April 10, 2016 19

Exhibit 14: Summary of estimates changes (cont’d)

2015A/E EPS 2016E EPS 2017E EPS 2015A/E CFPS 2016E CFPS 2017E CFPSCompany Ticker Analyst Rating Previous New Previous New Previous New Previous New Previous New Previous NewRoyalty Companies

Franco-Nevada FNV SW O $0.54 $0.56 $0.71 $0.87 $0.82 $1.06 $1.94 $1.97 $2.25 $2.35 $2.31 $2.52Osisko Gold Royalties OR DR O C$0.26 C$0.28 C$0.29 C$0.23 C$0.29 C$0.24 C$0.28 C$0.36 C$0.56 C$0.57 C$0.58 C$0.60Royal Gold* RGLD SW O $1.01 $2.78 $1.04 $3.95 $1.48 $5.16 $2.46 $2.46 $3.45 $3.50 $3.99 $4.29Sandstorm Gold SSL DR O - Spec ($0.06) ($0.08) ($0.10) ($0.08) ($0.07) ($0.05) $0.27 $0.26 $0.26 $0.26 $0.29 $0.30Silver Wheaton SLW DR O $0.55 $0.55 $0.51 $0.50 $0.61 $0.58 $1.06 $1.06 $1.21 $1.22 $1.24 $1.20

Silver ProducersFresnillo FRES TB U $0.15 $0.10 $0.32 $0.43 $0.55 $0.62 $0.62 $0.67 $0.75 $0.85 $0.98 $1.03Hecla Mining HL DR SP ($0.10) ($0.10) ($0.07) $0.03 $0.03 $0.16 $0.22 $0.22 $0.28 $0.38 $0.41 $0.53Hochschild Mining HOC TB O ($0.08) ($0.52) ($0.04) $0.01 $0.01 $0.18 $0.14 $0.28 $0.22 $0.40 $0.27 $0.53Pan American Silver PAAS DR SP ($0.37) ($0.38) ($0.24) $0.01 $0.10 $0.30 $0.47 $0.44 $0.68 $1.06 $0.98 $1.31Tahoe Resources THO SW SP $0.51 $0.55 $0.37 $0.43 $0.45 $0.52 $0.90 $0.96 $0.91 $0.95 $1.06 $1.14



April 10, 2016 20


2015A/E FCFPS 2016E FCFPS 2017E FCFPS 2015A/E Production 2016E Production 2017E ProductionCompany Ticker Analyst Rating Previous New Previous New Previous New Previous New Previous New Previous NewTier I Gold Producers

AngloGold Ashanti ANG RH O $1.04 $1.04 $0.77 $1.44 $1.61 $2.23 3,830 3,830 3,768 3,768 3,697 3,697Barrick Gold ABX SW SP $0.40 $0.40 $0.53 $0.84 $0.59 $0.91 6,120 6,120 5,288 5,288 5,092 5,092Gold Fields GFI RH SP $0.14 $0.14 $0.09 $0.24 $0.38 $0.52 2,159 2,159 2,129 2,120 2,269 2,260Goldcorp GG SW U $0.33 $0.33 $0.26 $0.62 $0.33 $0.42 3,464 3,464 3,024 3,024 2,995 2,995Kinross Gold KGC SW O $0.19 $0.19 $0.20 $0.22 $0.01 $0.16 2,595 2,595 2,831 2,826 2,733 2,729Newcrest Mining NCM PH U $1.06 $1.06 $0.43 $0.51 $0.84 $1.10 2,423 2,423 2,464 2,464 2,507 2,507Newmont NEM SW SP $1.45 $1.99 $1.88 $2.49 $2.68 $3.32 5,035 5,035 5,138 5,138 5,370 5,370

Tier II Gold ProducersAcacia Mining ACA TB O ($0.06) ($0.06) $0.19 $0.33 $0.44 $0.63 732 732 769 769 777 777Agnico-Eagle AEM SW O $0.98 $0.98 $1.08 $1.58 $0.83 $1.20 1,672 1,672 1,579 1,579 1,609 1,609Alamos Gold AGI DR SP ($0.65) ($0.65) ($0.19) ($0.08) ($0.16) ($0.04) 309 309 395 395 411 411B2Gold BTO SC O ($0.15) ($0.15) ($0.19) ($0.14) $0.00 $0.05 493 493 525 525 569 569Centamin CEY RH SP - Spec $0.09 $0.10 $0.06 $0.10 $0.05 $0.07 442 439 471 479 499 499Centerra Gold CG SW SP $0.40 $0.40 ($0.76) ($0.45) ($0.79) ($0.62) 536 536 526 526 625 614Detour Gold DGC DR O $0.18 $0.18 $0.66 $0.88 $0.97 $1.22 506 506 565 565 617 617Eldorado Gold EGO DR O ($0.26) ($0.26) ($0.07) ($0.02) $0.21 $0.26 682 682 580 580 641 641Evolution Mining EVN CK U A$0.12 A$0.12 A$0.20 A$0.22 A$0.25 A$0.31 437 437 782 782 733 733IAMGOLD IAG DR U ($0.46) ($0.46) ($0.22) ($0.09) $0.03 $0.20 806 806 787 787 869 866New Gold NGD DR SP ($0.35) ($0.35) ($0.70) ($0.72) $0.05 $0.11 436 436 386 386 415 416Northern Star NST PH SP A$0.39 A$0.39 A$0.40 A$0.43 A$0.44 A$0.55 573 573 568 568 589 589OceanaGold OGC CK SP $0.06 $0.06 ($0.04) $0.03 $0.35 $0.44 419 419 432 432 529 529Polymetal POLY TB O $0.31 $0.45 $0.20 $0.25 $0.17 $0.39 1,403 1,267 1,322 1,237 1,388 1,279Randgold Resources RRS TB SP $1.93 $1.93 $1.57 $2.16 $3.45 $4.40 1,211 1,211 1,244 1,244 1,274 1,274Regis Resources RRL CK SP A$0.15 A$0.15 A$0.23 A$0.25 A$0.25 A$0.31 310 310 294 294 295 295Sibanye Gold SGL RH SP R0.19 R0.19 R2.83 R4.15 R4.80 R6.16 1,536 1,536 1,606 1,606 1,582 1,582Yamana Gold AUY DR SP $0.19 $0.19 $0.08 $0.20 $0.06 $0.17 1,275 1,275 1,328 1,327 1,373 1,388

Tier III Gold ProducersAlacer Gold ASR DR SP $0.13 $0.13 ($0.27) ($0.15) ($0.86) ($0.86) 164 164 132 132 128 128Argonaut Gold AR SC O ($0.05) $0.01 $0.10 $0.16 $0.08 $0.14 130 130 129 129 129 129Beadell BDR CK SP (A$0.00) (A$0.00) A$0.05 A$0.07 A$0.06 A$0.07 122 122 177 177 172 172Dundee Precious Metals DPM SC O ($0.07) $0.17 $0.08 $0.10 ($0.10) ($0.06) 140 140 146 127 159 130Guyana Goldfields GUY SC O - Spec (C$0.44) (C$0.67) C$0.38 C$0.54 C$0.51 C$0.73 36 36 153 153 216 216Klondex Mines KDX SC O - Spec $0.36 $0.39 $0.03 $0.09 $0.28 $0.40 106 106 127 127 173 173Newmarket Gold NMI SW O $0.11 $0.11 $0.22 $0.26 $0.27 $0.34 223 223 228 228 229 229Perseus* PRU CK SP A$0.07 A$0.07 (A$0.31) (A$0.28) A$0.02 A$0.08 189 189 193 193 283 283Primero Mining PPP DR O ($0.14) ($0.14) $0.13 $0.17 $0.31 $0.35 221 221 221 221 237 237Resolute Mining RSG CK SP (A$0.06) (A$0.06) A$0.20 A$0.22 A$0.10 A$0.16 326 326 308 308 241 241SEMAFO SMF DR R R R R R R R R R R R R RSilver Lake SLR CK O - Spec A$0.00 A$0.00 A$0.07 A$0.08 A$0.11 A$0.14 122 122 132 132 123 123Silver Standard SSRI DR SP $0.25 $0.25 $0.23 $0.41 $0.56 $0.68 349 349 366 357 321 322Tahoe Resources THO SW SP $0.15 $0.20 $0.16 $0.26 $0.32 $0.42 172 172 357 357 421 421Teranga Gold TGZ SW SP ($0.02) ($0.02) ($0.03) $0.01 $0.04 $0.08 182 182 210 210 227 227Timmins Gold TMM SC U ($0.08) ($0.09) $0.06 $0.11 ($0.01) $0.00 93 93 67 80 10 10



April 10, 2016 21


2015A/E EPS 2016E EPS 2017E EPS 2015A/E CFPS 2016E CFPS 2017E CFPSCompany Ticker Analyst Rating Previous New Previous New Previous New Previous New Previous New Previous NewRoyalty Companies

Franco-Nevada FNV SW O $0.54 $0.56 $0.71 $0.87 $0.82 $1.06 $1.94 $1.97 $2.25 $2.35 $2.31 $2.52Osisko Gold Royalties OR DR O C$0.26 C$0.28 C$0.29 C$0.23 C$0.29 C$0.24 C$0.28 C$0.36 C$0.56 C$0.57 C$0.58 C$0.60Royal Gold* RGLD SW O $1.01 $1.01 $1.04 $1.10 $1.48 $1.80 $2.46 $2.46 $3.45 $3.53 $3.99 $4.31Sandstorm Gold SSL DR O - Spec ($0.06) ($0.08) ($0.10) ($0.08) ($0.07) ($0.05) $0.27 $0.26 $0.26 $0.26 $0.29 $0.30Silver Wheaton SLW DR O $0.55 $0.55 $0.51 $0.50 $0.61 $0.58 $1.06 $1.06 $1.21 $1.22 $1.24 $1.20

Silver ProducersFresnillo FRES TB U $0.15 $0.10 $0.32 $0.43 $0.55 $0.62 $0.62 $0.67 $0.75 $0.85 $0.98 $1.03Hecla Mining HL DR SP ($0.10) ($0.10) ($0.07) $0.03 $0.03 $0.16 $0.22 $0.22 $0.28 $0.38 $0.41 $0.53Hochschild Mining HOC TB O ($0.08) ($0.52) ($0.04) $0.01 $0.01 $0.18 $0.14 $0.28 $0.22 $0.40 $0.27 $0.53Pan American Silver PAAS DR SP ($0.37) ($0.38) ($0.24) $0.01 $0.10 $0.30 $0.47 $0.44 $0.68 $1.06 $0.98 $1.31Tahoe Resources THO SW SP $0.51 $0.55 $0.37 $0.43 $0.45 $0.52 $0.90 $0.96 $0.91 $0.95 $1.06 $1.14

* Represents fiscal year ended June 30 Note: Production for royalty/streaming companies is presented on a gold-equivalent basis Source: RBC Capital Markets estimate


April 10, 2016 22

Exhibit 15: Price target multiple change rationale

NAV Adj. CF Price Target Multiple Change Rationale

Company Ticker Analyst Rating Price Target RTT Prev. New Prev. New

Tier I Gold Producers

AngloGold Ashanti ANG RH O R214.27 R250.00 17% 1.00x 1.00x 12.0x 10.0x We have adjusted CF multiples to reflect lower optionality in a higher gold price environment

Barrick Gold ABX SW SP $15.18 $16.00 6% 1.20x 1.20x 18.0x 18.0x Unchanged

Gold Fields GFI RH SP R59.39 R62.00 5% 1.00x 1.00x 12.0x 10.0x We have adjusted CF multiples to reflect lower optionality in a higher gold price environment

Goldcorp GG SW U $17.11 $16.50 -3% 1.20x 1.20x 18.0x 18.0x Unchanged

Kinross Gold KGC SW O $3.91 $4.75 21% 1.20x 1.20x 14.0x 14.0x Unchanged

Newcrest Mining NCM PH U A$17.53 A$13.50 -23% 1.00x 1.00x 14.0x 14.0x Unchanged

Newmont NEM SW SP $29.10 $34.00 17% 1.20x 1.20x 18.0x 18.0x Unchanged

Average 1.11x 1.11x 15.1x 14.6x

Tier II Gold Producers

Acacia Mining ACA TB O £2.88 £3.45 21% 0.90x 0.90x 10.0x 8.0x We have adjusted NAV and CF multiples to reflect lower optionality in a higher gold price environment

Agnico-Eagle AEM SW O $38.47 $42.00 10% 1.20x 1.20x 18.0x 18.0x Unchanged

Alamos Gold AGI DR SP $6.17 $6.50 5% 1.15x 1.15x 15.0x 14.0x We have adjusted CF multiples to reflect lower optionality in a higher gold price environment

B2Gold BTO SC O C$2.16 C$3.00 39% 1.20x 1.20x 12.0x 12.0x Unchanged

Centamin CEY RH SP - Spec £1.00 £0.80 -20% 1.00x 1.00x 7.0x 7.0x Unchanged

Centerra Gold CG SW SP C$6.31 C$8.50 38% 1.00x 1.00x 8.0x 8.0x Unchanged

Detour Gold DGC DR O C$22.99 C$27.00 17% 1.20x 1.20x 18.0x 16.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Eldorado Gold EGO DR O $3.40 $3.50 3% 1.15x 1.15x 14.0x 13.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Evolution Mining EVN CK U A$1.68 A$1.30 -21% 1.00x 1.00x 7.0x 7.0x Unchanged

IAMGOLD IAG DR U $2.52 $2.75 9% 1.05x 1.00x 13.0x 10.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

New Gold NGD DR SP $4.15 $4.25 2% 1.15x 1.15x 16.0x 15.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Northern Star NST PH SP A$3.67 A$3.60 -1% 1.00x 1.00x 6.0x 6.0x Unchanged

OceanaGold OGC CK SP A$3.91 A$3.50 -7% 1.00x 1.00x 8.0x 8.0x Unchanged

Polymetal POLY TB O £6.90 £7.50 10% 1.60x 1.20x 15.0x 14.0x We have modified NAV and CF multiples to reflect higher growth and lower optionality in a higher gold price

Randgold Resources RRS TB SP £66.35 £58.00 -12% 1.60x 1.50x 20.0x 18.0x We have adjusted NAV and CF multiples to reflect lower optionality in a higher gold price environment

Regis Resources RRL CK SP A$2.35 A$2.30 0% 1.00x 1.00x 8.0x 8.0x Unchanged

Sibanye Gold SGL RH SP R54.99 R48.00 -12% 1.00x 1.00x 8.0x 8.0x Unchanged

Yamana Gold AUY DR SP $3.59 $4.00 12% 1.10x 1.15x 13.0x 12.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Average 1.13x 1.10x 12.0x 11.2x

Tier III Gold

Alacer Gold ASR DR SP C$2.68 C$3.25 21% 1.10x 1.00x 11.0x 10.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Argonaut Gold AR SC O C$2.22 C$3.00 35% 1.00x 1.00x 8.0x 8.0x Unchanged

Beadell BDR CK SP A$0.29 A$0.30 3% 0.80x 0.80x 5.0x 5.0x Unchanged

Dundee Precious Metals DPM SC O C$2.21 C$3.00 36% 1.00x 1.00x 10.0x 10.0x Unchanged

Guyana Goldfields GUY SC O - Spec C$5.41 C$7.00 29% 1.00x 1.00x n.a. n.a. Unchanged

Klondex Mines KDX SC O - Spec C$3.92 C$5.00 28% 1.00x 1.00x 13.0x 13.0x Unchanged

Newmarket Gold NMI SW O C$2.92 C$3.50 20% 1.00x 1.00x 10.0x 10.0x Unchanged

Perseus PRU CK SP A$0.41 A$0.40 -2% 0.80x 0.80x 6.0x 6.0x Unchanged

Primero Mining PPP DR O $1.84 $3.00 63% 1.05x 1.05x 11.0x 11.0x Unchanged

Resolute Mining RSG CK SP $0.64 $0.60 -6% 0.80x 0.80x 5.0x 5.0x Unchanged

SEMAFO SMF DR R C$4.70 R R R R R R R

Silver Lake SLR CK O - Spec A$0.32 A$0.60 85% 0.80x 0.80x 5.0x 5.0x Unchanged

Silver Standard SSRI DR SP $6.28 $7.50 19% 1.10x 1.10x 13.0x 12.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Tahoe Resources THO SW SP C$14.75 C$15.00 4% 1.20x 1.20x 18.0x 18.0x Unchanged

Teranga Gold TGZ SW SP C$0.79 C$0.90 14% 0.80x 0.80x 8.0x 8.0x Unchanged

Timmins Gold TMM SC U C$0.33 C$0.25 -23% 1.00x 1.00x n.a. n.a. Unchanged

Average 0.96x 0.96x 9.5x 9.3x

Source: RBC Capital Markets estimate


April 10, 2016 23

Exhibit 15: Price target multiple change rationale (cont’d)

NAV Multiple Adj. CF Price Target Multiple Change Rationale

Company Ticker Analyst Rating Price Target RTT Prev. New Prev. New

Royalty Companies

Franco-Nevada FNV SW O C$84.77 C$98.00 17% 2.50x 2.50x 30.0x 30.0x Unchanged

Osisko Gold Royalties OR DR O C$14.26 C$18.00 27% 2.25x 2.25x 22.5x 22.5x Unchanged

Royal Gold RGLD SW O $52.75 $60.00 15% 1.50x 2.00x 18.0x 25.0x Multiples more accurately reflect decreased balance sheet risk and underlying investment attributes relative to

Sandstorm Gold SSL DR O - Spec C$4.63 C$5.00 8% 1.50x 1.50x 15.0x 15.0x Unchanged

Silver Wheaton SLW DR O $16.50 $21.00 29% 2.00x 2.00x 20.0x 20.0x Unchanged

Average 1.95x 2.05x 21.1x 22.5x

Silver Companies

Fresnillo FRES TB U £9.33 £7.50 -17% 1.60x 1.50x 15.0x 18.0x We have modified NAV and CF multiples to reflect higher growth and lower net debt following capex reductions

Hecla Mining HL DR SP $2.96 $3.25 10% 1.20x 1.15x 13.0x 12.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Hochschild Mining HOC TB O £1.13 £1.30 19% 1.10x 1.10x 10.0x 8.0x We have adjusted NAV and CF multiples to reflect lower optionality in a higher gold price environment

Pan American Silver PAAS DR SP $11.98 $12.00 1% 1.15x 1.15x 16.0x 15.0x We have adjusted CF multiples to reflect lower implied growth in a higher gold price environment

Tahoe Resources THO SW SP C$14.75 C$15.00 4% 1.20x 1.20x 18.0x 18.0x Unchanged

Average 1.25x 1.22x 14.4x 14.2x

Emerging Gold Producers

Asanko Gold AKG DR O - Spec C$3.18 C$3.25 2% 1.00x 1.00x n.a. n.a. Unchanged

Aureus AUE SW R R R R R R n.a. n.a. R

Continental Gold CNL DR O - Spec C$2.07 C$3.00 45% 1.00x 1.00x n.a. n.a. Unchanged

Dalradian DNA SW O - Spec C$0.95 C$1.50 58% 0.70x 0.70x n.a. n.a. Unchanged

Gold Road Resources GOR CK O - Spec A$0.47 A$0.60 29% 0.90x 0.90x n.a. n.a. Unchanged

Lundin Gold LUG SC O - Spec C$5.83 C$5.50 -6% 1.00x 1.00x n.a. n.a. Unchanged

Midas Gold Corp. MAX SW SP - Spec C$0.58 C$0.50 -14% 1.00x 1.00x n.a. n.a. Unchanged

NovaGold Resources NG SW SP - Spec C$7.51 C$8.00 7% n.a. n.a. n.a. n.a. Unchanged (Resource value)

Pilot Gold PLG DR O - Spec C$0.56 C$0.60 7% n.a. n.a. n.a. n.a. Unchanged (Resource value)

Premier Gold Mines Ltd. PG SC O - Spec C$3.28 C$4.50 37% 1.00x 1.00x n.a. n.a. Unchanged

Pretium PVG DR SP - Spec C$7.84 C$12.00 53% 1.00x 1.00x n.a. n.a. Unchanged

Roxgold ROG DR O - Spec C$0.91 C$1.10 21% 1.00x 1.00x n.a. n.a. Unchanged

Sabina Gold & Silver SBB SC SP - Spec C$0.95 C$1.25 32% 1.00x 1.00x n.a. n.a. Unchanged

Torex Gold TXG DR O - Spec C$1.79 C$2.25 26% 1.10x 1.10x n.a. n.a. Unchanged

Average 0.97x 0.97x n.a. n.a.

Source: RBC Capital Markets estimate


April 10, 2016 24

Contributing Authors

RBC Dominion Securities Inc.Stephen D. Walker (Head of Global Mining Research) (416) 842-4120 [email protected] Rollins (Analyst) (416) 842-9893 [email protected] Crittenden (Analyst) (416) 842-7886 [email protected] Mihaljevic (Senior Associate) (416) 842-3804 [email protected] Lam (Senior Associate) (416) 842-7840 [email protected] Oliphant (Associate) (416) 842-8934 [email protected]

Royal Bank of Canada - Sydney BranchPaul Hissey (Analyst) +61 3 8688 6512 [email protected] Klutke (AVP) +61 3 8688 6551 [email protected] O'Brien (Associate) +61 3 8688 6519 [email protected]

RBC Europe LimitedTyler Broda (Analyst) +44 20 7653 4866 [email protected] Hatch (Analyst) +44 20 7002 2111 [email protected] Slattery (Senior Associate) +44 20 7029 0870 [email protected]


April 10, 2016 25

Required disclosures

Non-U.S. analyst disclosureStephen D. Walker, Dan Rollins, Sam Crittenden, Mark Mihaljevic, Paul Hissey, Cameron Klutke, Tyler Broda, Richard Hatch,Alexandra Slattery, Wayne Lam, Melissa Oliphant and Connor O'Brien (i) are not registered/qualified as research analysts withthe NYSE and/or FINRA and (ii) may not be associated persons of the RBC Capital Markets, LLC and therefore may not be subjectto FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held bya research analyst account.

Conflicts disclosuresThis product constitutes a compendium report (covers six or more subject companies). As such, RBC Capital Markets chooses toprovide specific disclosures for the subject companies by reference. To access conflict of interest and other disclosures for thesubject companies, clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?entityId=1.These disclosures are also available by sending a written request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 BayStreet, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7 or an email to [email protected].

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, includingtotal revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generatedby investment banking activities of the member companies of RBC Capital Markets and its affiliates.

Distribution of ratingsFor the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories- Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick(TP)/Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively,the meanings are not the same because our ratings are determined on a relative basis (as described below).

Distribution of ratings

RBC Capital Markets, Equity Research

As of 31-Mar-2016

Investment Banking

Serv./Past 12 Mos.

Rating Count Percent Count Percent

BUY [Top Pick & Outperform] 887 51.78 258 29.09

HOLD [Sector Perform] 722 42.15 115 15.93

SELL [Underperform] 104 6.07 8 7.69

Conflicts policyRBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request.To access our current policy, clients should refer tohttps://www.rbccm.com/global/file-414164.pdfor send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, SouthTower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

Dissemination of research and short-term trade ideasRBC Capital Markets endeavors to make all reasonable efforts to provide research simultaneously to all eligible clients, havingregard to local time zones in overseas jurisdictions. RBC Capital Markets' equity research is posted to our proprietary websiteto ensure eligible clients receive coverage initiations and changes in ratings, targets and opinions in a timely manner. Additionaldistribution may be done by the sales personnel via email, fax, or other electronic means, or regular mail. Clients may alsoreceive our research via third party vendors. RBC Capital Markets also provides eligible clients with access to SPARC on the Firmsproprietary INSIGHT website, via email and via third-party vendors. SPARC contains market color and commentary regardingsubject companies on which the Firm currently provides equity research coverage. Research Analysts may, from time to time,


April 10, 2016 26

https://www.rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?entityId=1

include short-term trade ideas in research reports and / or in SPARC. A short-term trade idea offers a short-term view onhow a security may trade, based on market and trading events, and the resulting trading opportunity that may be available. Ashort-term trade idea may differ from the price targets and recommendations in our published research reports reflecting theresearch analyst's views of the longer-term (one year) prospects of the subject company, as a result of the differing time horizons,methodologies and/or other factors. Thus, it is possible that a subject company's common equity that is considered a long-term'Sector Perform' or even an 'Underperform' might present a short-term buying opportunity as a result of temporary selling pressurein the market; conversely, a subject company's common equity rated a long-term 'Outperform' could be considered susceptibleto a short-term downward price correction. Short-term trade ideas are not ratings, nor are they part of any ratings system, andthe firm generally does not intend, nor undertakes any obligation, to maintain or update short-term trade ideas. Short-term tradeideas may not be suitable for all investors and have not been tailored to individual investor circumstances and objectives, andinvestors should make their own independent decisions regarding any securities or strategies discussed herein. Please contactyour investment advisor or institutional salesperson for more information regarding RBC Capital Markets' research.

Analyst certificationAll of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all ofthe subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly orindirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s Financial ServicesLLC (“S&P”) and is licensed for use by RBC. Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or impliedwarranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warrantiesof originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing,in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special,punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Disclaimer

RBC Capital Markets is the business name used by certain branches and subsidiaries of the Royal Bank of Canada, including RBC Dominion Securities Inc., RBCCapital Markets, LLC, RBC Europe Limited, RBC Capital Markets (Hong Kong) Limited, Royal Bank of Canada, Hong Kong Branch and Royal Bank of Canada, SydneyBranch. The information contained in this report has been compiled by RBC Capital Markets from sources believed to be reliable, but no representation or warranty,express or implied, is made by Royal Bank of Canada, RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness. Allopinions and estimates contained in this report constitute RBC Capital Markets' judgement as of the date of this report, are subject to change without notice andare provided in good faith but without legal responsibility. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investmentadvice. This material is prepared for general circulation to clients and has been prepared without regard to the individual financial circumstances and objectives ofpersons who receive it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independentinvestment advisor if you are in doubt about the suitability of such investments or services. This report is not an offer to sell or a solicitation of an offer to buyany securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. RBC CapitalMarkets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, which includes profits attributable to investment bankingrevenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and otherinvestment products which may be offered to their residents, as well as the process for doing so. As a result, the securities discussed in this report may not beeligible for sale in some jurisdictions. RBC Capital Markets may be restricted from publishing research reports, from time to time, due to regulatory restrictions and/or internal compliance policies. If this is the case, the latest published research reports available to clients may not reflect recent material changes in the applicableindustry and/or applicable subject companies. RBC Capital Markets research reports are current only as of the date set forth on the research reports. This report isnot, and under no circumstances should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is notlegally permitted to carry on the business of a securities broker or dealer in that jurisdiction. To the full extent permitted by law neither RBC Capital Markets norany of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the informationcontained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of RBC Capital Markets.

Additional information is available on request.

To U.S. Residents:This publication has been approved by RBC Capital Markets, LLC (member FINRA, NYSE, SIPC), which is a U.S. registered broker-dealer and which acceptsresponsibility for this report and its dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting ina broker or dealer capacity and that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report, shouldcontact and place orders with RBC Capital Markets, LLC.To Canadian Residents:This publication has been approved by RBC Dominion Securities Inc.(member IIROC). Any Canadian recipient of this report that is not a Designated Institution inOntario, an Accredited Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) andthat wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBCDominion Securities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.To U.K. Residents:This publication has been approved by RBC Europe Limited ('RBCEL') which is authorized by the Prudential Regulation Authority and regulated by the FinancialConduct Authority ('FCA') and the Prudential Regulation Authority, in connection with its distribution in the United Kingdom. This material is not for general


April 10, 2016 27

distribution in the United Kingdom to retail clients, as defined under the rules of the FCA. However, targeted distribution may be made to selected retail clients ofRBC and its affiliates. RBCEL accepts responsibility for this report and its dissemination in the United Kingdom.To Persons Receiving This Advice in Australia:This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been preparedfor general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting onthis material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisitionor possible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that productand consider that document before making any decision about whether to acquire the product. This research report is not for retail investors as defined in section761G of the Corporations Act.To Hong Kong Residents:This publication is distributed in Hong Kong by RBC Capital Markets (Hong Kong) Limited and Royal Bank of Canada, Hong Kong Branch (both entities which areregulated by the Hong Kong Monetary Authority ('HKMA') and the Securities and Futures Commission ('SFC')). Financial Services provided to Australia: Financialservices may be provided in Australia in accordance with applicable law. Financial services provided by the Royal Bank of Canada, Hong Kong Branch are providedpursuant to the Royal Bank of Canada's Australian Financial Services Licence ('AFSL') (No. 246521). RBC Capital Markets (Hong Kong) Limited is exempt from therequirement to hold an AFSL under the Corporations Act 2001 in respect of the provision of such financial services. RBC Capital Markets (Hong Kong) Limited isregulated by the HKMA and the SFC under the laws of Hong Kong, which differ from Australian laws.To Singapore Residents:This publication is distributed in Singapore by the Royal Bank of Canada, Singapore Branch, a registered entity granted offshore bank licence by the MonetaryAuthority of Singapore. This material has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of anyrecipient. You are advised to seek independent advice from a financial adviser before purchasing any product. If you do not obtain independent advice, you shouldconsider whether the product is suitable for you. Past performance is not indicative of future performance. If you have any questions related to this publication,please contact the Royal Bank of Canada, Singapore Branch. Royal Bank of Canada, Singapore Branch accepts responsibility for this report and its disseminationin Singapore.To Japanese Residents:Unless otherwise exempted by Japanese law, this publication is distributed in Japan by or through RBC Capital Markets (Japan) Ltd. which is a Financial InstrumentsFirm registered with the Kanto Local Financial Bureau (Registered number 203) and a member of the Japan Securities Dealers Association ("JSDA").

.® Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.Copyright © RBC Capital Markets, LLC 2016 - Member SIPC

Copyright © RBC Dominion Securities Inc. 2016 - Member Canadian Investor Protection FundCopyright © RBC Europe Limited 2016

Copyright © Royal Bank of Canada 2016Copyright © RBC Capital Markets (Hong Kong) Limited 2016

All rights reserved


April 10, 2016 28

Global Gold Outlook: The Time is Right for GoldApr 10, 2016 · into a $1,250 gold price. A dovish...

Documents

Transcript of Global Gold Outlook: The Time is Right for GoldApr 10, 2016 · into a $1,250 gold price. A dovish...