April 7, 2011

Premier Gold Mines Target Raised To C$10 From C$8.50 by Canaccord

Significant resource growth at Hardrock

We reiterate our SPECULATIVE BUY rating on Premier Gold following the release of an updated Hardrock NI 43-101 resource estimate, which was 33% above our estimate.

Our rating is based on takeover optionality associated with the Red Lake and PQ North projects in addition to continued resource growth and project development potential at the Hardrock project in Ontario and the Saddle project in Nevada.

Measured and Indicated resources increased by 269% to 2.5 Moz and Inferred resources increased by 164% to 1.1 Moz, largely explained by the delivery of an initial underground resource estimate. The overall 3.6 Moz resource (open pit plus underground, M&I plus Inferred) was 33% above our previous estimate of 2.7 Moz.

The inaugural underground resource at Hardrock was 2.60 Moz grading 5.67 g/t (including 1.1 Moz in the M&I category and 1.5 Moz in the Inferred category), which was significantly higher than our estimate of 750,000 oz.

The updated open pit resource of 1.02 Moz was down slightly down from the previous estimate of 1.1 Moz with the variance explained by a reduced pit depth partially offset by the additions from the Kaily Zone. While the open pit resource was below our estimate of 1.55 Moz, the variance is primarily attributable to a reduction in the pit depth (160 m from 320 m previously).

Our 12-month target price has been increased to C$10.00 (from C$8.50) primarily due to a larger resource at Hardrock. We have also increased our optionality value for PQ North, justified by Goldcorp's continued exploration success at Musselwhite and a potential expansion of the Lynx zone towards the north.