Old API Wind-down Ltd - Ordinary Shares ARLZQ

cibc research report

[GOODVIBE]

This is not new (Feb 18), so maybe its been posted before, and if so, I apologize for the duplicate but I don't see it in the recent posts.

I don't think I can post the whole thing but here's the highlights:

-rated a sector outperformer
-12-18 month target price: &7.50

Our $7.50 price target is derived from using a cash flow multiple of 10x our

2011 estimate of
.76/share. ARZ commands a premium multiple due to its

low geopolitical risk but we think that some of the technical risk associated with

the Joanna project may offset this premium. Our price target implies a P/NAV of

1.55x our $4.83 NAV estimate using a US$1,000/oz. gold price and 5% discount

rate.

The greatest risk to our price target is our forecast for bullion prices to average

US$1,200/oz. for 2011. Our price target is based on mine operations continuing

without interruptions. Mining is an inherently risky business, where technical,

political, and human issues can influence operations. In some cases, these can

be significant, such as unstable ground conditions, mechanical issues at the mill,

or labor shortages. ARZ has exposure to the Canadian dollar, which could impact

our price target. Further risks to the price target involve development risk at

Joanna.

Aurizon Mines Ltd.

Executive Summary: A Canadian Value Story With

Growth Opportunities

ARZ offers investors a unique opportunity to invest in a well-capitalized

intermediate producer that is currently trading at 0.8x P/NAV and 9x 2010

P/CF (a deep discount to its peers). ARZ is the only intermediate producer

with 100% of its production from Canada and 100% from gold.

The aggressive drill program at Casa Berardi with 11 drills should add

flexibility to the mine by developing higher-grade areas and adding

resources. We expect a mine life of >11 years. After a transitional year in

2010, we expect production to increase to 170,000 oz. in 2011.

Joanna has the potential to add 110,000 oz. of annual production to ARZ's

profile, bringing total production for ARZ to >250,000 oz. by 2013, and

making it one of the most meaningful companies with primary production in

Canada. Cash costs are expected to be avg. $430/oz. for ARZ with Joanna.

On an EV per ounce of production, ARZ currently trades at a 35% discount

to the group. As of 2/18, we are initiating coverage of ARZ with a SO rating

and $7.50 PT. We believe ARZ, driven by stable production from Casa

Berardi and growth potential from Joanna, will outperform peers in 2010.