METALS AND MINING

Iberian Minerals Corp. | Orest Wowkodaw, CA, CFA, 1.416.869.3092

IZN : TSX-V : C$0.49 | C$165.6M | Buy , Target C$1.25

• Initiating coverage of a significantly undervalued mid-tier copper producer

with a BUY rating and C$1.25 target

This Daily Letter is a summary of our full report. We are initiating research coverage of

Iberian Minerals with a BUY rating based on four conclusions:

• Copper exposure: Copper remains our preferred medium- to long-term investment

vehicle in the base metals complex. While Iberian has a very large near-term hedge

book, with roughly 90% of total payable copper production hedged for 2010 at prices

markedly below current levels, the size of the hedge book significantly declines in

2011.

• Low-cost assets with low political risk: Iberian’s two operating assets are high-grade

and relatively low-cost, which should help to ensure survival through the cycle. Both

assets are located in jurisdictions with relatively low political risk.

• Trafigura relationship: Iberian is being nurtured by Trafigura in a manner similar to

the very successful Glencore-Xstrata model.

• Valuation: Despite the hedges, Iberian is currently trading at very attractive 2010E and

2011E EV/EBITDA multiples of 2.2x and 1.3x, well below the mid-tier producer peer group at 5.1x and 4.0x. The company is also trading at a substantial 73.1% discount to

our 10% NPV of C$1.82 per share (vs. a 5.2% premium for the peer group).

Our C$1.25 target price is based on an average 2010-2011 EV/EBITDA multiple of 4.5x. A successful ramp-up at Aguas Tenidas and the roll-off of low-priced copper hedges are

critical milestones required to achieve a rerating in the shares over the next 12 months.