News/Event/Highlights

· Yesterday, ER reported the final assays from its 20-hole (6650-metre) winter drill program near its 100%-owned, 1moz Eau Claire gold deposit, northern Quebec, Canada. This program tested a “high-grade keel” southeast of the 450W zone.

· 65 gold bearing veins and schist zones were intersected (3.25 veins/hole average), with 27 veins with visible gold (42%).

· Hit ratios of the B to G veins varied from 5% (F vein) to 42% (G and D veins) for holes with gold bearing intervals. 12.0 g/t gold weighted average grades for the high-grade keel, versus the deposit average of 14.0 g/t.

· Local 348g/t gold over 0.5-metre intersection in the D vein may be related to another bonanza grade intersection 580 metres to the east.

Analysis/Conclusion

· Impact – Generally positive: ER continues to document bonanza grade gold mineralization, especially in systematic, less than 100-metre vertical depth areas that lie significantly southeast of the Eau Claire gold deposit. However, closer drill spacing is required to establish continuity and vein density for open pit potential.

· The D and G vein hit ratio appears acceptable, however, compared with the 450W zone, the geological setting in the southeast has many felsic porphyritc intrusions that may limit vein strike continuity, lead to more pinch swell of vein thickness, and mean less vein density overall. This could make open pits less likely in the southeast.

· We maintain our BUY recommendation and target price of $2.00. Our valuation is mainly based on US$35 to US$50 EV/oz for the Eau Claire gold deposit indicated/inferred resources, and our estimate of potential resources as part of a satellite deposit that will ultimately be milled at the to-be-built Eleonore mine complex. However, we will soon move toward a DCF model focused on the 450W zone, now that this drilling is complete.

Michael Gray
Mining Exploration Analyst
Genuity Capital Markets
604-694-6961
Michael.Gray@genuitycm.com

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