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eResearch Corporation www.eresearch.ca StockPotentials March 26, 2010 . . . . . . 3 ABERDEEN INTERNATIONAL INC. Price (March 26, 2010) $0.40 52-Week High-Low $0.52 - $0.18 Shares O/S 87.5 million Market Cap $35.0 million 50-day Average Volume 126,200 200-day Average Volume 234,600 Year-End January 31 Symbol TSX: AAB Website www.aberdeeninternational.ca Financial Data eResearch Analysts: Bill Campbell, B.Comm. Bob Weir, B.Sc., B.Comm., CFA eResearch Corporation 56 Temperance Street, Suite 501 Toronto, ON M5H 3V5 Telephone: 416-643-7650 Toll Free: 877-856-0765 Note: This report was prepared with public information only. Source: www.bigcharts.com THE COMPANY Aberdeen International Inc. (Aberdeen or the Company) is a Toronto-based, global investment and merchant banking company focused on small capitalization companies in the mining, energy, and agricultural commodities sectors. The Company seeks to acquire equity participation in pre-IPO and early-stage resource companies where it can provide value-added managerial and board-level advisory services as well as financial support. Aberdeens goal is to generate triple-digit returns on its investments over an 18-to-24-month holding period. The Companys management team has raised over $1 billion in the past five years. INVESTMENT CONSIDERATIONS Strengths Management team and board of directors have extensive mining experience; Proven ability to raise funds; and Diversified portfolio of attractive investments. Challenges Political risk in some areas in which the Company invests; Investment portfolio geared to volatile mining sector; and Share trading fairly illiquid. http://www.aberdeeninternational.ca/http://www.bigcharts.com/Aberdeen International Inc. eResearch StockPotentials eResearch Corporation www.eresearch.ca Page 2 BACKGROUND Aberdeen had originally operated as a Canadian exploration and royalty company. However, in July 2007, it completed a Change of Business transaction into a publicly-traded global resource investment and merchant banking company. In anticipation of its Change of Business, the Company raised $60 million through a private placement in June 2007. INVESTMENT PORTFOLIO The Companys investment portfolio continued to grow through the fourth quarter of fiscal 2010 (three months ended January 31, 2010). As at January 31, 2010, its total value was $0.78 per share compared with $0.66 per share at the end of October 2009 and $0.40 per share at the end of fiscal 2009. A summary of the Companys holdings is shown below: Investment Holdings (January 31, 2010) Publicly-Traded Symbol millions Crocodile Gold Corp. TSX: CRK $12.0 Sulliden Gold Corporation Ltd. TSX: SUE $7.3 Avion Gold Corporation TSX-V: AVR $5.4 Other $14.4 Total Publicly-Traded $39.1 Private $7.7 Non-Trading Warrants Crocodile Gold Corp. $4.9 Allana Potash Corp. $1.1 Dacha capital Inc. $1.0 Other $3.2 Total Warrants $10.2 Loans Receivable $7.9 Cash $3.3 TOTAL $68.2 Source: Company Aberdeen International Inc. eResearch StockPotentials eResearch Corporation www.eresearch.ca Page 3 NET ASSET VALUE The following table indicates the Companys net asset value (NAV) since its conversion to an investment and merchant banking company in the third quarter of fiscal 2008. As shown in the table above, the Companys NAV grew rapidly from the third quarter of fiscal 2008 to the end of the second quarter of fiscal 2009, before declining significantly in response to the collapse in equity markets and virtual elimination of credit for mining development. With the recovery in equity markets in 2009, increased availability of credit, improved economic prospects in many areas and an astute investment performance, management achieved a strong recovery in the Companys NAV to its pre-market crash level (on a per share basis) by the end of the third quarter of fiscal 2010 (October 31, 2009). CONTINGENCY The Company engaged a leading South African law firm and, in July 2009, filed a claim against Simmer and Jack Mines, Limited and First Uranium Corporation in connection with a US$10 million loan and gold royalty agreement which it had made with Simmer in late 2006. Simmer filed a statement of defence in November 2009. The Company anticipates that court proceedings will begin before the end of its current fiscal year. FINANCIALS (1) Q3/F2010 versus Q3/F2009 For the third quarter of fiscal 2010, the Company reported earnings of $0.06 per share compared with a loss of $0.46 per share for the same period in fiscal 2009. The dramatic improvement reflected improved conditions in the mining industry in the latest period, which enabled the Company to achieve an unrealized gain on its investments of approximately $13 million compared with an unrealized loss of $47.6 million in the year-earlier quarter. The Company also benefited from a decline in the unrealized loss on its Simmer and Jack royalty and loan to $0.4 million compared with $19.2 million in the third quarter of fiscal 2009. The Company is financially strong with working capital of $71.7 million and no long-term debt as at October 30, 2009 . Salient statistics are shown on the following page. Aberdeen International Inc. eResearch StockPotentials eResearch Corporation www.eresearch.ca Page 4 ($000s) Q3/F2010 Q3/F2009 Net Investment Gains 9,395 (49,473) Other Revenue (1,103) (16,761) Total Revenue 8,292 (66,234) Pretax Income 7,886 (64,082) Pretax Margin 95.1% na Net Income 5,098 (44,639) Net Margin 61.5% na EPS $0.06 -$0.46 Shares OS (million) 87.5 97.6 (2) 9Months/F2010 versus 9Months/F2009 For the first three quarters of fiscal 2010, Aberdeen reported earnings of $0.09 per share compared with a loss of $0.31 per share for the first nine months of fiscal 2009. As was the case in the third quarter, the improved results reflected the benefit of unrealized gains on investments in the latest period of $28.2 million compared with an unrealized loss on investments of $40.9 million in the year earlier period. The unrealized loss on the Simmer and Jack royalty and loan declined to $8.5 million in the latest period from $16.4 million in the fiscal 2009 period. ($000s) 9Mos/F2010 9Mos/F2009 Net Investment Gains 23,509 (35,617) Other Revenue (7,607) (8,288) Total Revenue 15,902 (43,905) Pretax Income 13,202 (44,039) Pretax Margin 83.0% na Net Income 8,593 (31,217) Net Margin 54.0% na EPS $0.09 -$0.31 Shares OS (million) 90.5 100.7 Aberdeen International Inc. eResearch StockPotentials eResearch Corporation www.eresearch.ca Page 5 OUTLOOK Following the significant rebound in commodity prices which took place in 2009 and an increased availability of financing for mining companies, prospects for the global mining industry are now on a sounder footing. Although commodity prices are not expected to rise significantly in 2010 as they did in 2009, they should continue to have moderate growth, fuelled by continued strong demand from China and sustained recovery in industrial countries. In this environment, we expect that the demand for financing of new mining projects will continue to grow, providing opportunities for Aberdeen International to provide funding for new small-cap resource companies. In a recent presentation, the Company indicated that the value of deals being evaluated for near-term investment was approximately $5 million. In addition, the Company will benefit from further significant growth of its existing investment portfolio. Based on consensus estimates of the 12-month target prices of its three major holdings - Crocodile Gold, Sulliden Gold, and Avion Gold the Companys share positions in these companies would provide gains of at least $20 million over the period. This excludes the impact of any warrants that Aberdeen has in these companies. VALUATION We have chosen two merchant bank/mining investment companies to provide comparable valuations for Aberdeen. They are Endeavour Financial Group and Pinetree Capital Ltd. As shown in the table below, these companies are trading at an average 29% discount to their net asset value and at 1.2 times trailing 12-month earnings. Aberdeen is trading at a 63% discount to its net asset value and at 1.1 times trailing 12-month earnings. As investors become more aware of Aberdeen over time, we believe that its discount will narrow, providing significant capital appreciation potential. CORPORATE COMPARISONS Stock Shs. O/S Mkt Cap EPS P/E NAV Discount Company Symbol Price (million) (million) (ttm) (ttm) P.S. to NAV Endeavour EDV $2.48 94.6 $235 $2.51 1.0 $3.41 27% Pinetree PNP $1.73 132.3 $229 $1.19 1.5 $2.53 32% Avg 1.2 Avg 29% Aberdeen AAB $0.40 87.5 $35 $0.35 1.1 $1.08 63% Source: eResearch Aberdeen International Inc. eResearch StockPotentials eResearch Corporation www.eresearch.ca Page 6 MANAGEMENT George Fraught - CEO Mr. Fraught has over 25 years of senior management experience in the natural resource, financial services and pharmaceutical industries. David Stein - President & COO Mr. Stein was previously a senior partner and equities analyst at Cormark Securities, having joined Sprott Securities, Cormarks predecessor company, in 2001. DIRECTORS Stan Bharti George Fraught David Stein Hon. Pierre S. Pettigrew Mike Hoffman Dr. Bernard Wilson Bruce Humphrey CORPORATE INFORMATION Aberdeen International Inc. 65 Queen Street West Suite 815 Toronto, ON, M5H 2M5, Telephone: 416-861-5899 Website: www.aberdeeninternational.ca http://www.aberdeeninternational.ca/