Another Hostile Takeover (Photo credit: Wikipedia)
Inmet Mining Corporation
IMN : TSX : C$70.43
BUY Target: C$82.00
Inmet is a Canadian-based, international mining company that produces copper, zinc and gold. Its three operations include Cayeli in Turkey, Pyhasalmi in Finland, and Las Cruces in Spain. The company is currently developing the very large Cobre Panama Cu-Mo-Ag-Au project in Panama (80% IMN).
Inmet Mining released slightly better than expected Q4/12 operating results (production of 27,600t Cu and 20,700t Zn were 1.6% and 25.7%
above our forecast) and issued initial 2013 production and cost guidance that was largely in line with our estimates. We are reiterating our BUY
rating and our 12-month target of C$82.00 per share.
Our C$82.00 target is based on a 50/50 weighting of our fundamental based target and our takeover based target. Our fundamentals based target of C$74.27 is based on a 50/50 weighting of 5.0x our 2013E EV/EBITDA ($64.98) and 1x our revised 8% NPV estimate ($83.57). Our takeover
based target of C$90.67 is based on an 8.5% premium to our 10% NPV estimate of C$83.57, representing the average takeover premium realized within our coverage universe over the past two years. In light of the currently outstanding C$72.00 per share hostile takeover offer from
First Quantum Minerals (TSX: FM), in our view, the Q4/12 operating results and 2013 guidance are likely to have little impact on the shares.
We now forecast 2013E-2015E total Cu production of 112,314t, 115,168t, and 115,242t (from 115,137t, 115,168t, and 115,242t).
Inmet is currently trading at a 2013E and 2014E EV/EBITDA of 5.6x and 7.5x, and at a 15.7% discount to our 10% NPV estimate of C$83.57 per share, which compares with our mid-cap base metal producer coverage universe average of 8.1x, 6.7x, and a 16.0% discount to NPV.
Posted by jackbassteam on January 17, 2013
Cameco Corporation — Uranium – Fuel – Electricity – Mining …South West Industrial Saskatoon, Saskatchewan, Canada (Photo credit: Wikipedia)
Cameco* (CCO : TSX : $16.84)
Paladin Energy (PDN : TSX : $0.86)
With China expected to grow its nuclear power program from the 15 currently operating reactors to 67 by 2021, of which 26 are under construction, does it surprise you that China is planning on step up (acquiring?) uranium mining projects in foreign countries?
According to the China Daily, China National Nuclear Corp. (CNNC) will speedup overseas uranium mining exploration, focusing on Australia, Africa and Central Asia, to meet growing uranium demand. Sun Qin, Chairman of CNNC, the state-owned energy company which runs more than 40% of China’s nuclear facilities, said, “We have no worries about uranium resource reserves, as we will enhance efforts on exploring the resources both at home and abroad…We will step up uranium mining projects in foreign countries…The target overseas markets include Australia, Africa
and Central Asia.”
Currently 95% of China’s uranium imports come from Kazakhstan, Namibia, Australia and Uzbekistan.
China recently reported that a large leaching sandstone-type uranium deposit had been discovered in northern China’s Inner Mongolia autonomous region. Most uranium watchers in the West shrugged their shoulders when they heard the news. With the number of publicly listed uranium companies trading at multi-year or all-time lows, does it make sense that the Chinese are willing to “explore” for new resources instead of buy? Why not look to acquire uranium mining projects around the globe? The answer may be that the Chinese believe regulatory and government approval is difficult to get in certain countries
Posted by jackbassteam on November 15, 2012
Former Billiton corporate logo. (Photo credit: Wikipedia)
BHP Billiton (BHP : NYSE : US$70.06),
As BHP Billiton continues to move ahead with its massive Jansen potash mine in Saskatchewan, a Bay Street analyst has cautioned that building the mine is BHP’s worst option if it wants to diversify into potash.
The analyst noted, “We believe that the best decision for BHP is not to build or buy its way into the potash industry, and instead return cash to shareholders. However, we expect BHP will not go down this route.” He thinks that the economics of Jansen are not attractive.
Using a US$450-per-tonne price, they project an internal rate of return (IRR) of only 10%, with the company needing a lofty US$600 per tonne to achieve a modest 12-15% IRR. The problem is that building Jansen could put pressure on prices, because it would bring more product into a market that is already well supplied right now.
The analyst believes that potash demand is adequately covered out to the mid-2020s without Jansen. And while they wrote that the decision to build Jansen can be justified by taking a much longer-term view and focusing on the period beyond 2025, they noted that is “inherently riskier” because of the forecasting challenges.
Posted by jackbassteam on October 24, 2012
English: Internationally recognized symbol. Deutsch: Gefahrensymbol für Radioaktivität. Image:Radioactive.svg (Photo credit: Wikipedia)
Cameco* (CCO : TSX : $21.08)
Paladin Energy* (PDN : TSX : $1.44)
Uranium One* (UUU : TSX $ 2.48
Japan‘s government, as expected by most, announced that the country’s new energy policy intends to stop using nuclear power by the 2030s. According to a 22-page policy paper released Friday, Japan will restart existing reactors deemed safe by regulators and retire them all by the 2030s. The strategy calls for spending on renewable and recyclable energy, as well as added conservation efforts, to make up for the absence of nuclear power, which provided 30% of Japan’s energy prior to last year’s Fukushima Dai-ichi partial nuclear meltdown.
It remains to be seen whether the policy shift will be enough to convince voters to re-elect the incumbent Prime Minister Yoshihiko Noda’s government. If they are defeated by the Liberal Democratic Party in the coming months, Japan’s nuclear policy could change again. The Washington Post reported this week that political analysts in Japan predict that Noda’s ruling Democratic Party of Japan will be handed a landslide defeat in an upcoming parliamentary election, opening the door for the Liberal Democratic Party to return to power.
Of note, until 2009 the LDP ruled almost uninterrupted for half a century, engineering Japan’s rise into one of the world’s most nuclear-dependent nations. One Bay Street analyst commenting on the decision stated Friday, “The potential restart of reactors in Japan is a greater positive than the eventual phase out is a negative.” Adding, “It is worth commenting that 2030 is a long time in the future, and we have seen other countries make similar announcements in the past (e.g. Spain, Sweden) only to continually postpone the date of the phase out.”
Posted by jackbassteam on September 17, 2012
Paladin Energy (PDN : TSX : $1.38)
Paladin Energy reported year-end financial and operational results.
For the year ending June 30, 2012, the company produced a record 6.895 million pounds of U308, an increase of 21% from the previous year. The company’s Langer Heinrich mine produced 4.417 million pounds and its Kayelekera mine delivered 2.478 million pounds, with the project running at 90% nameplate capacity for the last eight months.
Average cash costs for the year came in at $39 per pound, compared to $35 per pound last year. PDN noted that both mines now, for the first time, are operating without concurrent construction expansion programmes, which will allow a strong focus on operational and cost optimisation for the coming year.
For the upcoming year the company will focus on improving its cash costs. The company has approved a cost reduction in 2011 to target reducing corporate and marketing costs by at least 15%. Tighter controls have led to a reduction of corporate overheads, including travel costs and outsourced work. Labour costs have also reduced as the high capital investment phase that the company was in has now largely been completed. The company also noted that in Labrador, the three-year moratorium on the mining, development and production of uranium ended providing access to the Michelin deposit and validating the company’s decision to acquire the Aurora uranium assets at a discounted price of US$1.90/lb U3O8. The ending of the moratorium has cleared the way for the company to re-commence work on the project with substantial long-term resource increases are expected.
Posted by jackbassteam on August 31, 2012