Byron Capital TSX.V:AVC Initiation Report

Please see end of this report for important disclosures

Equity Research

Recent Price: $1.68 52 Week Range: $0.45 - $1.95 Shares O/S: Basic (MM) 23.0

F.D. (MM) 29.7 Market Cap (MM): $38.6 Average Daily Vol. (3 mo.) 20,000 Fiscal Year End: Feb. 28 Cash (Est.) (MM): $4.0

Company Description: American Vanadium Corp., formerly known as Rocky Mountain Resources Corp., is an exploration and development company focused on bringing the Gibellini vanadium project to production by Q4/12. The Gilbellini project is located in Nevada, U.S.A.

May 19, 2011

Rating: SPECULATIVE BUY American Vanadium Corp. Target Price: $3.45 (AVC – TSXV) All figures in C$, unless otherwise noted. Low-Cost Project with Value-Added Option

Initiating Coverage: We are initiating coverage on American Vanadium Corp. (“AVC”), a company with 100% ownership of the Gibellini project, a vanadium project located in Nevada, U.S.A. It expects to bring a low capital and operating cost, heap leach vanadium mine to production by the end of 2012. The company also has nearby properties under exploration for added life of mine (“LOM”).

Low Strip Ratio, Operating Costs and Capex: Given that the Gibellini Hill deposit lies on the top of a hill, the strip ratio will be minimal at approximately 0.2:1. AVC will be able to run an open pit, acid heap leach operation bypassing the need to grind or roast the ore, potentially becoming one of the lowest cost primary vanadium producers. AVC also purchased historic drill results from adjacent Louie Hill, which was formed from the same geologic structure, and is currently building a resource model. Louie Hill could add up to 50% to the LOM and will be a near-term catalyst for the company.

Near Term Producer with High-Value Potential: Vanadium electrolyte is the material used in vanadium redox batteries (“VRBs”) and a product that commands a premium to V2O5 flakes. In an intermediary step in AVC’s heap leach process, vanadium electrolyte is created prior to V2O5 flake production. With refinement of this product, AVC would have the ability to sell the value added product, but for now, we have only incorporated selling V2O5 flakes into our valuation. The ability to produce vanadium electrolyte to the VRB market at a lower cost than its competitors would provide additional upside to AVC.

Summary: We expect AVC to complete an updated resource and a final feasibility study over the next couple of months, which will be catalysts to add value to the project. We believe AVC can be a near- term low-cost vanadium producer with the Gibellini Project. Given the location, geology and deposit shape, as well as the low operating and capital costs required, we are initiating coverage on American Vanadium Corp. with a SPECULATIVE BUY rating and a $3.45 target price.

Jonathan Lee, MBA Battery Materials & Technologies 647.426.1674 [email protected]

mailto: [email protected]?subject=American%20Vanadium%20Initiating%20Coverage%20Report

American Vanadium Corp.

Jonathan Lee, MBA 647.426.1674 [email protected] P a g e | 2

Vanadium Overview The use of vanadium has been on a steady rise in the past few years, interrupted only by the recent recession. The source of vanadium is concentrated with 84% of the global supply coming from just three countries – China, South Africa and Russia. Vanadium is mainly used in high-strength steels and is used anywhere from a few tenths to a few percent vanadium as an alloying material by weight. Vanadium has the dual advantage of not only significantly increasing the hardness of steel, but also doing so without making the resulting steel brittle, so its strength is also enhanced. As nations around the world mandate the use of stronger steels for construction, vanadium is in greater demand.

We also foresee two other uses for vanadium that are not largely anticipated by the market and are non-metallurgical in nature. Vanadium is arguably the best cathode material for lithium-ion batteries, a material called lithium vanadium phosphate, or Li3V2(PO4)3. This compound makes a battery that is higher voltage (so likely higher power) and capable of storing more energy per given battery size than any other commonly referenced cathode material. It is also less expensive, from a pure raw material point of view, than the more commonly used lithium cobalt oxide cathode, ubiquitous in laptop computers.

Vanadium can also be used in VRBs, a completely different type of battery to store grid-level amounts of electrical energy. VRBs can be scaled up to provide millions of watts of power and store millions of watt-hours of energy, enough to keep thousands of North American homes powered for nearly a full day. These batteries are widely touted as being able to provide the storage required to make unreliable (the industry term is “non-dispatchable”) alternative sources of electrical power, such as wind or solar, more widely deployable within the grid. We believe the common use for this type of battery is likely to be more pedestrian in nature, with utilities using such batteries to postpone required capital expenditures on substation upgrades and the like, thereby improving their IRR. This type of use does not require waiting for the construction of wind or solar farms. Within the VRBs, vanadium is used in the form of vanadium electrolyte, which is made from what is basically a sulphuric acid highly concentrated with vanadium. AVC may have the potential of producing the vanadium electrolyte as part of its process and could be the lowest cost supplier of that material.

Vanadium’s main use is in the steel industry as a steel hardener. However, there are new applications for vanadium that may drive demand higher



All American – Location and Infrastructure AVC’s 100%-owned Gibellini vanadium deposit covers 1,374 hectares in Nevada, U.S.A., which is one of the best mining jurisdictions in the world. The project is easily accessible by a two mile dirt road extending westward from Nevada State Route 379, which connects 15 miles north to US Highway 50, a well paved two-lane highway (see Exhibit 2). A single phase power station is six miles away, which will be upgraded to three-phase with an electric line scheduled to be constructed for six miles. Water is available only 15 miles from the site and this would be sufficient for AVC’s needs. All of this nearby infrastructure should lower capital costs for the project and quickly get the project into production.

Exhibit 1 – Property Location

Source: Company reports


Additionally, given the small size of the project relative to nearby gold projects, an environmental assessment (“EA”) as opposed to an environmental impact statement (“EIS”) may be required for permitting. The scope of an EA is much less stringent than an EIS, and representatives from Nevada would be handling the process, which should speed up the process given their familiarity with heap leach type projects in the area. This should save capital as well as let the company bring the Gibellini project to production in a timely fashion.



Exhibit 2 – The Well-Paved Highway 50

Source: Byron Capital Markets

Resource An initial resource and a scoping study were completed for the Gibellini deposit in 2008. The vanadium is hosted in a black shale unit that ranges from 175 to 300 feet thick. The Gibellini deposit consists of 18.9 million tonnes grading 0.33% V2O5 within three types of black shale layered upon one another. Approximately 35.3% is within the oxidized zone, 50.3% within the transitional zone, and 14.4% within the sulphide zone. Column testing work was performed on the three types of rock during the preliminary economic assessment. Recoveries of 60%, 70%, and 52% were achieved in the oxidized, transitional and sulphide materials, respectively. Luckily for AVC, the oxide and transitional layers lie at the top of Gibellini Hill and will be mined first, adding value back to the company earlier.

Exhibit 3 – NI 43-101 Compliant Resource

Ore

(000 Tonnes) Grade

(%V2O5) Contained

(000 Tonnes V2O5) Indicated 16,335.1 0.339% 55.4 Inferred 2,575.0 0.282% 7.3 Total 18,910.0 0.33% 62.6 Source: Company reports



Easy Mining Apart from being located in a gold district and enjoying huge exploration upside, the vanadium enriched ore is located on top of Gibellini Hill with minimal overburden, which will allow for open pit mining. At a strip ratio of roughly 0.2:1 or less, minimal waste rock will have to be moved and processed, significantly reducing costs. To make it even easier, the heavily oxidized sedimentary deposit can be mined with a front-end loader with minimal need to blast prior to delivery to the crusher.

Exhibit 4 - Gibellini Deposit


Additional Targets for a Longer Mine Life While AVC plans to process 2.7 million tonnes of ore per year, for a LOM of 8.3 years, the company is planning additional targets on the same geologic trend. The formation of hills runs north to south (see Exhibit 5). The basins between the hills were part of historic erosions, so the hills share similar geological characteristics. A $1 million exploration program for 2011 is ongoing at AVC’s land package of 6,600 hectares.

AVC acquired results from over 60 historical drill holes for Louie Hill, which is located just to the south of the Gibellini Hill. Historical drilling was conducted by Union Carbide Corporation. AVC drilled 10 holes on Louie Hill and is performing metallurgical work to ensure the material can be similarly processed. AVC is also planning a drill program this year. The upcoming drill program, an updated resource, and results of the metallurgical work will be near-term catalysts for the company. Given that it is geologically similar, we expect Louie Hill to add to AVC’s resource and project LOM. In addition to Louie Hill, four new vanadium zones have been discovered just to the south for increased potential resource. A second potential resource on the geologic trend is the Del Rio project, which was acquired in September 2010. Surface sampling conducted by AVC last fall showed the Del Rio is mineralized over 550 metres of strike and 360 metres of width with some samples returning over 1% V2O5. Like the Gibellini Hill deposit, Louie Hill and Del Rio sit atop hills, which will likely reduce the strip ratio and mining costs. The exploration of these two targets would make the economics of the low-cost project more appealing with a longer LOM.

With a current LOM of eight years, there are additional targets with high probability of success to add to the resource and LOM



Exhibit 5 – Additional Targets


One of a Kind – No Roasting Necessary

Although a lower in-situ grade, the vanadium is hosted in a heavily oxidized sedimentary black shale unit. Based on positive column test work, AVC will use a sulphuric acid heap leach. This is in contrast to the process for magnetite hosted vanadium ores that utilized a mine, crush, grind, magnetic separation, and roasting. The difference should allow AVC to cheaply extract the vanadium, much like gold is removed using a cyanide leach process. Additionally, the vanadium is consistently found in the fractures of the sediment which adds another benefit -- reducing the crushing requirement, further reducing capital costs and operating costs.

This low-cost operation was tested on all three zones of the shale – the oxide, transitional and sulphide zones. Additional metallurgical work is being done to refine acid consumption usage. We are confident that the inexpensive metallurgical flow sheet can be done much like a gold heap leach process. After the heap leach process, a vanadium-bearing sulphuric acid solution is put through a solvent extraction process to load the vanadium onto an organic extractant/diluent mixture, then back to a sulphuric acid solution to do two things; remove impurities and to increase the vanadium concentration. Ammonia is then used to precipitate out the vanadium as ammonia metavanadate (“AMV”), then thickened and calcined to form vanadium pentoxide.



Exhibit 6 - The Flow Sheet


Ore delivery

Primary crushing

Secondary crushing

Agglomeration Ore curing Heap building Preg pond

Barren pond Solvent extraction

Purple FlakesV2O5

productionAMV precipitation Organic stripping

Vanadium Electrolyte

A simple flow sheet shows how AVC can be a low cost producer of vanadium and potentially vanadium electrolyte for the use in vanadium redox batteries



Valuation We expect AVC will spend $85 million in 2012 to construct a heap leach operation in Nevada and assume $45 million will come in the form of debt at 9%. This will be used to build a 2.7 million tonne per year operation. To date, we have not included the additional resource potential from nearby Louie Hill and Del Rio. The addition of these deposits would undoubtedly improve the economics of the project. Also, AVC will process all zones of its deposit for a total LOM of 8.3 years. We have applied a recovery rate of 60% for the first 2.5 years, 70% for the following 4.5 years, and 50% for the last 1.3 years based on pilot work done to date on the three zones.

Even though AVC is exploring the possibility of producing vanadium electrolyte, which would considerably increase its revenue stream, we have yet to include it in our analysis. We have assumed a $32 per kilogram vanadium price for 2013, rising to $35 per kilogram by 2014, and staying at that level for the rest of the LOM. On operating costs we believe that AVC will be able to produce for roughly $15 per tonne mined ore, which includes mining, crushing, heap leach, solvent extraction, and vanadium precipitation. Finally, we have reduced our net income by 2.5% for royalty payments. We have used a 16% discount rate on the project but with further delineation of the flow sheet through the upcoming bankable feasibility study, we can see additional risk reduction.

Exhibit 7 – Discounted Cash Flow

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Fixed capital investments ($85,000) Capital costs: debt $45,000 1 2 3 4 5 6 7 8 9 10 Principal paid $0 ($2,962) ($3,228) ($3,519) ($3,836) ($4,181) ($4,557) ($4,967) ($5,414) ($5,902) ($6,433) Debt service (8%, 10 year) $0 ($4,050) ($3,783) ($3,493) ($3,176) ($2,831) ($2,455) ($2,044) ($1,597) ($1,110) ($579) Net income ($2,352) ($23,547) $26,543 $26,985 $33,136 $39,711 $40,890 $41,893 $42,761 $22,857 $4,907 Royalties (2.5%) $0 $0 $664 $675 $828 $993 $1,022 $1,047 $1,069 $571 $123 Depreciation

$17,085 $13,651 $10,907 $8,715 $6,963 $5,564 $4,445 $3,552 $2,838 $2,267

Change in working capital $0 $0 $6,755 $663 $608 $608 ($8) ($8) ($8) ($2,470) ($4,129) Cash flow to AVC ($2,352) ($49,424) $29,548 $33,035 $36,579 $40,892 $40,881 $40,331 $39,838 $21,691 $4,747 Discount rate 16% Discounted cash flow ($2,352) ($42,607) $21,959 $21,164 $20,202 $19,469 $16,779 $14,270 $12,151 $5,704 $1,076 NPV @ 16% $87,816 Cash $5,000 Cash from warrants/options $2,150 Shares outstanding (FD) $27,636 Target price $3.45 Source: Byron Capital Markets

Value can easily be added to the project through a longer LOM, which should happen soon, and the ability to produce higher value vanadium electrolyte



Conclusion In the Gibellini Deposit in Nevada, U.S.A., AVC has a project that will be a low-cost provider of vanadium. Through a combination of a unique deposit that does not require grinding and roasting, vanadium-bearing material located in the fractures, and a low strip ratio, AVC should be able to cheaply produce vanadium through a heap leach process similar to a cyanide leach process for gold. In addition to low expected operating costs, low capital costs will be required given the availability of infrastructure around the property and the simple process.

Although it has a current LOM of approximately 8 years, there is additional upside through the purchase of historic core holes from nearby Louie Hill, which AVC plans on incorporating into the upcoming resource. Twin holes at select locations will be drilled to confirm historic results. An updated NI 43-101, a feasibility study, and drill results will all be near-term catalysts to be released in mid-2011. On a longer-term basis, exploration will continue at hills to the south that are part of the same geological structure, such as Del Rio. The exploration should add additional years to the LOM and add value to shareholders. Another potential for AVC is the ability to go down the value chain and produce vanadium electrolyte for VRBs. In the flow sheet, vanadium electrolyte (high concentrations of vanadium in a sulphuric acid solution) is produced prior to the production of vanadium pentoxide. Metallurgical work is on-going to determine specifications of the material and potential commercialization. Nonetheless, this is a value add that has not been included in our analysis but may add additional value in the future as work progresses. The project is cheap and relatively simple. Given the ability to quickly bring a low-cost operation to market, we initiate coverage on AVC with a SPECULATIVE BUY rating and a $3.45 target price.



Appendix 1 – Income Statement

Exhibit 8 – Income Statement

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Saleable (V kg, 000) 0 0 2,527 2,527 2,737 2,948 2,948 2,948 2,948 2,106 696 V2O5 price (US$/lb, Asian metal) $7

V metal ($/kg) $26 $29 $32 $35 $35 $35 $35 $35 $35 $35 $35

Revenue (V kg, 000) $0 $0 $80,539 $88,593 $95,976 $103,359 $103,359 $103,359 $103,359 $73,828 $24,392

Mining costs (000) $0 $0 $5,448 $5,448 $5,448 $5,448 $5,448 $5,448 $5,448 $5,448 $1,800 Crushing costs (000) $0 $0 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362 $1,362 $450 Processing cost (000) $0 $0 $27,240 $27,240 $27,240 $27,240 $27,240 $27,240 $27,240 $27,240 $9,000 COGS $0 $0 $34,050 $34,050 $34,050 $34,050 $34,050 $34,050 $34,050 $34,050 $11,250 Gross profit $0 $0 $46,489 $54,543 $61,926 $69,309 $69,309 $69,309 $69,309 $39,778 $13,142 Mineral exploration $1,000 $1,020 $1,040 $1,061 $1,082 $1,104 $1,126 $1,149 $1,172 $1,195 $1,219 General and administrative $1,186 $1,210 $1,271 $1,334 $1,401 $1,471 $1,545 $1,622 $1,703 $1,788 $1,877 Stock-based compensation $166 $182 $200 $210 $215 $210 $206 $202 $198 $194 $190 Expenses $2,352 $2,412 $2,512 $2,606 $2,698 $2,785 $2,877 $2,972 $3,073 $3,177 $3,287

EBITDA ($2,352) ($2,412) $43,978 $51,937 $59,228 $66,523 $66,432 $66,336 $66,236 $36,601 $9,856

Debt service (8%, 10 year) $0 $4,050 $3,783 $3,493 $3,176 $2,831 $2,455 $2,044 $1,597 $1,110 $579

$1 $2 $3 $4 $5 $6 $7 $8 $9 $10

Depreciation $0 $17,085 $13,651 $10,907 $8,715 $6,963 $5,564 $4,445 $3,552 $2,838 $2,267

EBT ($2,352) ($23,547) $26,543 $37,537 $47,337 $56,729 $58,414 $59,847 $61,087 $32,653 $7,009 Tax expense (30%) $0 $0 $0 $10,553 $14,201 $17,019 $17,524 $17,954 $18,326 $9,796 $2,103 Net income ($2,352) ($23,547) $26,543 $26,985 $33,136 $39,711 $40,890 $41,893 $42,761 $22,857 $4,907 Royalties (2.5%) $0 $0 $664 $675 $828 $993 $1,022 $1,047 $1,069 $571 $123 ($2,352) ($23,547) $25,880 $26,310 $32,308 $38,718 $39,867 $40,845 $41,692 $22,285 $4,784 Deficit, beginning of period ($3,006) ($5,358) ($28,906) ($3,026) $23,284 $55,592 $94,310 $134,177 $175,023 $216,715 $239,000 Deficit, end of period ($5,358) ($28,906) ($3,026) $23,284 $55,592 $94,310 $134,177 $175,023 $216,715 $239,000 $243,784




Appendix 2 – Balance Sheet

Exhibit 9 – Balance Sheet 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Assets Current assets

Cash and cash equivalents $4,651 $409 $30,157 $63,402 $100,196 $141,299 $182,386 $222,919 $262,955 $284,840 $289,777 Amounts receivable $28 $28 $6,712 $7,383 $7,998 $8,613 $8,613 $8,613 $8,613 $6,152 $2,033 Prepaid expenses $84 $84 $84 $84 $84 $84 $84 $84 $84 $84 $84

Reclamation bonds $55 $55 $55 $55 $55 $55 $55 $55 $55 $55 $55 PP&E $924 $68,839 $55,188 $44,281 $35,566 $28,603 $23,039 $18,594 $15,042 $12,205 $9,937 Total assets $5,741 $69,414 $92,195 $115,205 $143,899 $178,654 $214,178 $250,266 $286,749 $303,336 $301,886 Liabilities Current Liabilities

Accounts payable & accrued liabilities $280 $280 $209 $217 $225 $232 $240 $248 $256 $265 $274 Debt $0 $42,038 $38,810 $35,291 $31,455 $27,274 $22,717 $17,749 $12,335 $6,433 $0 Shareholder equity Shareholder capital $10,028 $55,211 $55,411 $55,622 $55,836 $56,047 $56,253 $56,455 $56,653 $56,847 $57,037 Contributed surplus $791 $791 $791 $791 $791 $791 $791 $791 $791 $791 $791 Retained earnings ($5,358) ($28,906) ($3,026) $23,285 $55,592 $94,311 $134,177 $175,024 $216,715 $239,001 $243,784 Total liabilities & shareholder equity $5,741 $69,414 $92,195 $115,205 $143,899 $178,654 $214,177 $250,266 $286,749 $303,336 $301,886




Appendix 3 – Cash Flow Statement

Exhibit 10 – Cash Flow Statement

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Cash flows from operating activities Operating income (loss) ($2,352) ($23,547) $25,880 $26,310 $32,308 $38,718 $39,867 $40,845 $41,692 $22,285 $4,784

Depreciation $0 $17,085 $13,651 $10,907 $8,715 $6,963 $5,564 $4,445 $3,552 $2,838 $2,267

Stock-based compensation $166 $182 $200 $210 $215 $210 $206 $202 $198 $194 $190 Changes in non-cash working capital $0 $0 ($6,755) ($663) ($608) ($608) $8 $8 $8 $2,470 $4,129 Net cash used in operating activities ($2,186) ($6,280) $32,977 $36,765 $40,629 $45,283 $45,645 $45,501 $45,450 $27,787 $11,370

Cash flows from investing activities Reclamation bonds $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase of property and equipment $0 ($85,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 Net cash (used in) provided by investing activities $0 ($85,000) $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash flows from financing activities Exercise of warrants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Proceeds from additional borrowings, net $0 $42,038 ($3,228) ($3,519) ($3,836) ($4,181) ($4,557) ($4,967) ($5,414) ($5,902) ($6,433) Equity issue $3,700 $45,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net cash provided by financing activities $3,700 $87,038 ($3,228) ($3,519) ($3,836) ($4,181) ($4,557) ($4,967) ($5,414) ($5,902) ($6,433)

Cash and cash equivalents $1,514 ($4,242) $29,748 $33,245 $36,794 $41,102 $41,088 $40,533 $40,036 $21,885 $4,937 Cash at beginning of the period $3,137 $4,651 $409 $30,157 $63,402 $100,196 $141,299 $182,386 $222,919 $262,955 $284,840 Cash at end of the period $4,651 $409 $30,157 $63,402 $100,196 $141,299 $182,386 $222,919 $262,955 $284,840 $289,777 Source: Byron Capital Markets



Appendix 4 – Management and Directors William J. Radvak, President, CEO and Director

Mr. Radvak received a Mining and Mineral Process Engineering Degree (1986) from the University of British Columbia. In January 2010, he joined AVC as President and CEO. Previously, Mr. Radvak was a Founder and CEO of Response Biomedical Corporation (“Response Biomedical”), a publicly-listed medical device company that commercializes rapid immunoassay diagnostic tests for its marketing partners, 3M Company and Roche Diagnostics Corp. Mr. Radvak led Response Biomedical from its inception to a 90-employee company, and raised in excess of $50 million in public offerings.

Michael Doyle, Executive Vice President, Operations

Mr. Doyle has more than 30 years of domestic and international mining experience in surface and underground operations, most recently as Executive Vice President of Allied Nevada Gold Corp. (“Allied Nevada Gold”). Prior to joining Allied Nevada Gold, Mr. Doyle held positions of Senior Vice President of Operations for Kinross Gold Corporation, Vice President and General Manager of Round Mountain Gold Corp., (Kinross-Barrick joint venture), and General Manager of Gold Bar operations for Atlas Gold Corp.. He graduated in 1977 from the University of California at Santa Barbara with a degree in geology and was the past chairman of the Nevada Mining Association.

Alan D. Branham, Vice President, Exploration and Director

Mr. Branham has more than 20 years of international exploration experience, most recently as President of Midway Gold Corp. Prior to Midway, Mr. Branham was a senior geologist with Newmont Mining Corp. Mr. Branham earned a Master of Science Degree in Economic Geology from Washington State University, a Bachelor Degree from Stanford University, California, and has participated in successful exploration projects in the south-western United States, Mexico and Central America. Mr. Branham has conducted extensive exploration in the Great Basin area of Nevada for the past eight years, resulting in several significant mineral discoveries. In addition, he was involved with the discovery of several world-class gold deposits in the Carlin Trend in Nevada.

Peter Miller, Chief Financial Officer

Since May 1997, Mr. Miller has been the Chief Financial Officer of Quest Management Corp., a company that provides management and administrative services to public companies. Mr. Miller has also served as an officer and director of a number of public companies. Mr. Miller obtained a Bachelor of Applied Science Degree from the University of Waterloo, Ontario in 1970 and was granted the designation of Chartered Accountant from the Ontario Institute of Chartered Accountants in 1974.

Brian J. McAlister, Director

Mr. McAlister is the President of Cornet Capital Corporation, a company owned and controlled by Mr. McAlister, which is engaged in the business of assisting start-up corporations with capital raising and other consulting activities. Over the past 27 years, Mr. McAlister has assisted in excess of 25 early stage companies in various industries including biotechnology, enterprise software, and natural resources. Mr. McAlister holds a Bachelor of Science Degree (1979) with a major in Finance from the University of Denver.



Brian E. Bayley, Director

With more than 25 years of business experience, Mr. Bayley has extensive knowledge in areas of asset backed lending, real estate, corporate restructuring and natural resources. Mr. Bayley is currently a Director and Resource Lending Advisor of Sprott Resource Lending Corp. (formerly Quest Capital Corp.), a TSX and NYSE Amex listed resource lending corporation. Previously, he was President and CEO of Quest Capital Corp. Mr. Bayley holds an MBA from Queen’s University. Mr. Bayley is currently a director and/or officer on numerous other public companies.

George T. Hawes, Director

Mr. Hawes is a private investor and is President of G.T. Hawes & Co., a private New York real estate and investment company. He is currently a Director of Proginet Corporation, an enterprise security software company, and is a Director of Midway Gold Corp., a gold exploration and development company.

Dr. E. Kelly Hyslop, Director

Dr. Hyslop is a Director of Proginet Corporation, a publicly traded company on the NASDAQ BB, in Long Island, New York. Dr. Hyslop is retired after 25 years as a Physician and Clinical Professor in the Department of Medicine at UBC. He has been involved in multiple start-up companies, generally in finance and then involved on the Board or Directors.



IMPORTANT DISCLOSURES Analyst's Certification All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of the subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report. The particulars contained herein were obtained from sources which we believe to be reliable but are not guaranteed by us and may be incomplete. Byron Capital Markets Ltd. (“Byron”) is a Member of IIROC and CIPF. Byron compensates its research analysts from a variety of sources. The research department is a cost centre and is funded by the business activities of Byron including institutional equity sales and trading, retail sales and investment banking. Since the revenues from these businesses vary, the funds for research compensation vary. No one business line has greater influence than any other for research analyst compensation. Dissemination of Research Byron endeavours to make all reasonable efforts to provide research simultaneously to all eligible clients. Byron equity research is distributed electronically via email and is posted on our proprietary website to ensure eligible clients receive coverage initiations and ratings changes, targets and opinions in a timely manner. Additional distribution may be done by the sales personnel via email, fax or regular mail. Clients may also receive our research via a third party. Company Specific Disclosures: 1 This company has compensated Byron for investment banking services in the preceding 12 months. If those services were managing or co-managing an initial or secondary offering of securities for this company, the issuance of this report is, at minimum, 40 calendar days from the closing of an initial offering, or 10 calendar days from the closing of a secondary offering. 2 The research analyst(s) and/or associates who prepared our original research report have viewed the material operations of this company. 3 Their travel expenses were not reimbursed by this company, its employees or affiliates. Investment Rating Criteria STRONG BUY BUY

The security represents extremely compelling value and is expected to appreciate significantly from the current price over the next 12-18 month time horizon. The security represents attractive value and is expected to appreciate significantly from the current price over the next 12-18 month time horizon.

SPECULATIVE BUY The security is considered a BUY but in the analyst’s opinion possesses certain operational and/or

financial risks that may be higher than average. HOLD The security represents fair value and no material appreciation is expected over the next 12-18 month

time horizon. SELL The security represents poor value and is expected to depreciate over the next 12-18 month time

horizon. Other Disclosures This report has been approved by Byron for distribution in Canada for the use of Byron’s clients. Clients wishing to effect transactions in any security discussed should do so through a qualified Byron salesperson, registered in their jurisdiction. Informational Reports From time to time, Byron will issue reports that are for information purposes only, and will not include investment ratings. These reports will be clearly labeled as appropriate.



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Company Directory

Campbell Becher Chief Executive Officer 647-426-1657 [email protected]

Ed Flood Non-Executive Chairman [email protected]

Geoff Clarke, MBA, LL.B., LL.M. President and Chief Operating Officer 416-867-8882 [email protected]

Dale Sampson Chief Compliance Officer 416-867-1569 [email protected]

Gill ian Wong-Hinds, CGA Chief Financial Officer 416-867-8883 [email protected]

Robert Orviss, CFA Managing Director 647-426-1668 [email protected]

Derrick Chiu Managing Director, Head of Equity Capital Markets 647-426-1662 [email protected]

Brad Freelan Vice President, Investment Banking 416-867-3144 [email protected] Rak Vice President, Investment Banking 604-697-2456 [email protected] Hobbs, CA Co-Head, Mergers and Acquisitions 647-426-0467 [email protected]

Greg Borsk, CA Co-Head, Mergers and Acquisitions 647-426-0466 [email protected]

Steve Lambros, MD Associate 647-426-1659 [email protected]

Elisa Chio Associate 647-426-0288 [email protected]

Mary Stuart Associate 604-616-5311 [email protected]

Russell Mills Associate 647-426-0290 [email protected]

Marco Beretta Associate, Syndication 647-426-0289 [email protected]

Guy Gordon, CFA, MBA Managing Director, Head of Research, Oil & Gas Analyst 647-426-1672 [email protected]

Jon Hykawy, PhD, MBA Head of Global Research, Clean Tech and Materials Analyst 647-426-1656 [email protected]

Al P. Nagaraj, M.S., MBA Special Situations Analyst 647-426-0291 [email protected]

Byron Berry, M.A., CFA Strategist 416-867-1623 [email protected]

Jeff Wu, CFA Mining Analyst 604-697-2455 [email protected]

Brian Szeto, M.A., CFA Mining Analyst 647-426-1673 [email protected]

Jonathan Lee, MBA Battery Materials and Technologies Analyst 647-426-1674 [email protected]

Merril W. McHenry, CFA Mining and Metals Analyst 647-426-1660 [email protected]

Omid Ameri Associate 416-867-3984 [email protected]

Trading Desk (main telephone line) 647-426-1670Nick Stajduhar Vice President, Head of Institutional Sales 647-426-1664 [email protected]

Jonathan Samahin, CFA Vice President, Head of Global Trading 647-426-1670 [email protected]

Tom Chudnovsky Vice President, Institutional Sales 647-426-1665 [email protected]

David Kemp Managing Director, Institutional Trading 647-426-1666 [email protected]

Cyrus Osena Vice President, Head of Business Development 647-426-1675 [email protected] Farrell Institutional Sales & Trading 647-426-1667 [email protected]

Kariv Oretsky Institutional Sales 647-426-1658 [email protected] Perkell Institutional Trading 647-426-1671 [email protected] Lam Associate 416-867-2375 [email protected]

Mike Gardner Head of Proprietary Trading 416-867-8880 [email protected]

Charles Pollock Proprietary Trader 416-967-8880 [email protected]

Charlie Mitchell Proprietary Trader 416-469-9609 [email protected]

Taylor Davison Equity Trader 416-867-8880 [email protected]

Kathy Sherban Sr. Vice President, Operations and Administration 416-867-1650 [email protected] Ladeira Vice President, Compliance 647-426-1660 [email protected] Antoszek, CGA Controller 416-364-2678 [email protected]

Elisabeth Wightwick Executive Assistant 416-867-8881 [email protected]

Dorothy Dudek Executive Assistant 647-426-0471 [email protected]

Shawn Morgan Managing Editor & Production Coordinator 647-426-0473 [email protected]

Sandra Stefanescu Compliance Officer 641-426-0470 [email protected]

Victoria Will iston Administrative Assistant 416-867-9800 vwill [email protected]

Jen Levy Associate, Operations and Administration 416-867-9064 [email protected]

Sandra Day Office Manager – Vancouver 604-697-2540 [email protected] Belcher Office Manager – Toronto 647-426-1660 [email protected]

EXECUTIVE

INVESTMENT BANKING

FINANCE, ADMINISTRATION AND OPERATIONS

SALES & TRADING

RESEARCH

Documents

Byron Capital TSX.V:AVC Initiation Report