All posts in category Mining

Inmet Mining Corporation Target $ 82

Another Hostile Takeover

Another Hostile Takeover (Photo credit: Wikipedia)

Inmet Mining Corporation 
IMN : TSX : C$70.43
BUY  Target: C$82.00 

COMPANY DESCRIPTION:
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).

Investment recommendation


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.
Investment highlights
 We now forecast 2013E-2015E total Cu production of 112,314t, 115,168t, and 115,242t (from 115,137t, 115,168t, and 115,242t).
Valuation
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.

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by jackbassteam on January 17, 2013  •  Permalink
Posted in Mining, Takeovers
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Posted by jackbassteam on January 17, 2013

http://amp2012.com/2013/01/17/inmet-mining-corporation-target-82/

Labrador Iron Ore Royalty Corporation

Iron Ore Company of Canada

Iron Ore Company of Canada (Photo credit: Wikipedia)

Labrador Iron Ore Royalty Corporation 
LIF : TSX : C$29.22
BUY Target: C$39.00

COMPANY DESCRIPTION:
Labrador Iron Ore Royalty Corporation’s (“LIORC”) primary assets are a direct equity interest in and royalties related to The Iron Ore Company of Canada (“IOC“). IOC operates mines, a concentrator and a pellet plant in Labrador City, Newfoundland. IOC also owns the 418 kilometre railway
between Labrador City and Sept-lles, and port infrastructure at Sept-lles.

Investment recommendation
LIORC’s primary assets are a direct equity interest in and royalties related to IOC. We believe LIORC will be able to increase distributions once the current IOC capacity expansions are complete and IOC resumes the payment of equity dividends to equity owners. In order to maintain the current C$0.375 quarterly distribution in the meantime, we forecast LIORC’s cash balance to trough at about C$10 million during 2013, before recovering during H2/13 upon our assumption of resumed IOC dividend payments.

Valuation

Our C$39.00 12-month target price is based on a 5% distribution yield to our LT forecast distribution of C$1.95pa, which is based on a LT iron ore price forecast of US$95/t, (62% Fe, landed in China), much lower than the current spot of US$121/t. The current distribution is C$1.50pa. Our NPV8 estimate is C$27.10 per share.

We use an 8% discount rate for NPV valuation for more typical Canadian-based base metals producers. However, on the assumption that LIORC continues to distribute cash flow as it becomes available, we are comfortable setting our target price closer to our NPV5 of C$41.69. Our C$39.00 price target equates to dividend yields of 5.2% for 2013, 7.6% for 2014, and 6.3% for
2015.
Risks

Other than the iron ore price itself, we believe the main downside LIF share price risk is the possibility of a temporarily lower distribution.
Given that C$0.50pa of the current C$1.50pa distribution is presented as a “special distribution”, we see some risk that LIORC may decide to
eliminate the special distribution .

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by jackbassteam on November 22, 2012  •  Permalink
Posted in Base Metals, Mining
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Posted by jackbassteam on November 22, 2012

http://amp2012.com/2012/11/22/labrador-iron-ore-royalty-corporation/

Uranium Sector Hopes For China Buyouts

Cameco Corporation --- Uranium - Fuel - Electr...

Cameco Corporation — Uranium – Fuel – Electricity – Mining …South West Industrial Saskatoon, Saskatchewan, Canada (Photo credit: Wikipedia)

Nov 15

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

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by jackbassteam on November 15, 2012  •  Permalink
Posted in Cameco, China, Mining, Uranium, Uranium Miners
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Posted by jackbassteam on November 15, 2012

http://amp2012.com/2012/11/15/uranium-sector-hopes-for-china-buyouts/

Imperial Metals Corp. BUY Target $ 20

A share entitling to 1/8 of the Great Copper M...

A share entitling to 1/8 of the Great Copper Mine. Dated June 16 1288. (Photo credit: Wikipedia)

Nov. 12

 

Imperial Metals Corp.

III : TSX : C$12.73

COMPANY DESCRIPTION:
Imperial Metals is a Canadian-based company with interests in two mature producing copper mines in British Columbia (Mount Polley [100%]; Huckleberry [50%]). More importantly, the future and value driver of the company resides in its 100% interest in the very large but undeveloped Red Chris copper-gold project in northwest BC, which is permitted and scheduled to enter production via an open-pit in late-2014.

Q3 Results As Expected

Investment recommendation
Imperial Metals reported relatively in line Q3/12 results (adjusted EPS of $0.10 vs. our estimate of $0.08 and the First Call consensus of $0.06) and reiterated its 2012 guidance. The development of Red Chris is now well underway, with no material updates this quarter. We are reiterating our BUY rating and 12-month target of C$20.00 per share. Our C$20.00 target price is based on a 25/75 weighting of 5.0x our 2013E EV/EBITDA (C$5.05 per share) and 1.0x our 10% NPV estimate (C$25.61 per share). Our BUY rating is supported by the company’s 100% interest in the Red Chris Cu-Au deposit, which in our view, represents one of the only world class assets in the hands of a Canadian mid-tier producer. However, we believe the company’s relatively weak balance sheet and lack of secured funding for Red Chris is likely to overhang the shares in the near-term.
Investment highlights
With the development of Red Chris Phase I, we forecast annual average copper production to reach 135 million lbs at a cash operating cost of US$1.16/lb Cu beginning in 2015; this compares to 2012 Cu production of only 51 million lbs at cash costs of $1.77/lb.
Valuation
Imperial is currently trading at a relatively compelling 50.4% discount to our 10% NPV estimate of C$25.61 per share versus a 33.2% discount for the mid-tier peer group.

 

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by jackbassteam on November 12, 2012  •  Permalink
Posted in Base Metals, Economic Recovery, Mining
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Posted by jackbassteam on November 12, 2012

http://amp2012.com/2012/11/12/imperial-metals-corp-buy-target-20/

Uranium One: Is It Cheap Enough to Be Attractive ?

pribram - uranium mine refuse pile

pribram – uranium mine refuse pile (Photo credit: uair01)

Nov. 8

Uranium One   (UUU : TSX : $2.00)
“Very attractive risk/reward trade-off at current levels.  - Cannacord  analyst

” Uranium One recently announced Q3/12 results that came in lower than expected.

The company‘s adjusted EPS of $0.01 was short of the $0.03 expected by the Street. Weaker sales volumes and an F/X loss were blamed for the shortfall. More importantly, while the company reiterated its U308 production/sales guidance for 2012 and 2013, Uranium One issued maiden 2014 U308 production and sales guidance of 13.0m lbs and 13.0m lbs that was 9% and 6% below our forecast. The company also announced that it was no longer planning to develop the South Zarechnoye deposit due to economics.

Canaccord has maintained his bullish rating on UUU but reduced his target price. His bullish rating is supported by the company’s compelling growth platform, low operating cost profile and attractive relative valuation.

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by jackbassteam on November 8, 2012  •  Permalink
Posted in Mining, Uranium, Uranium Miners
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Posted by jackbassteam on November 8, 2012

http://amp2012.com/2012/11/08/uranium-one-is-it-cheap-enough-to-be-attractive/

BHP Billiton Move Into Potash – A Billion Dollar Blunder

Former Billiton corporate logo.

Former Billiton corporate logo. (Photo credit: Wikipedia)

October 24

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.

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by jackbassteam on October 24, 2012  •  Permalink
Posted in Commodities, fertilizer, Mining, Potash
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Posted by jackbassteam on October 24, 2012

http://amp2012.com/2012/10/24/bhp-billiton-move-into-potash-a-billion-dollar-blunder/

Japan To Exit Nuclear Power

English: Internationally recognized symbol. De...

English: Internationally recognized symbol. Deutsch: Gefahrensymbol für Radioaktivität. Image:Radioactive.svg (Photo credit: Wikipedia)

Sept 17.

Uranium

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.”

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by jackbassteam on September 17, 2012  •  Permalink
Posted in Mining, Nuclear Power, Uranium, Uranium Miners
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Posted by jackbassteam on September 17, 2012

http://amp2012.com/2012/09/17/japan-to-exit-nuclear-power/

China Growth Hopes Rallies Copper

First Quantum Minerals

First Quantum Minerals (Photo credit: Wikipedia)

September 10

Freeport McMoran (FCX : NYSE : US$39.53)

First Quantum Minerals (FM : TSX : $21.98)

Inmet Mining (IMN : TSX : $49.08)

Teck Resources (TCK.B : TSX : $29.52)

Come and Get Me COPPER.

 Copper rallied after the Chinese government went on an infrastructure project announcement spree, worth more than $158 billion. According to Xinhua, the state-run news agency, 55 investment projects in the past couple of days have been  given the go-ahead. On top of rail and road construction, the National Development and Reform Commission (NDRC) announced approvals for a wide variety of other projects including: sewage treatment, power stations, wind farms, and waste incinerators.

On the heels of China’s poor PMI data reported last week, Credit Suisse Chief Economist for Non-Japan Asia Dong Tao said he believed the NDRC may speed up the approval process of infrastructure projects initiated by the local governments but thinks the ultimate success will depend on banks’ willingness to lend. China skeptics were out in full force on Friday, by saying some of these projects might already have been a part of local government stimulus plans and might not be ”new”. In addition, China stimulus might not be a good thing, there is the risk that it could exacerbate the country’s bad debt problem.

Freeport McMoran Copper & Gold, the de facto proxy of Chinese economic health traded higher day that day. With Friday’s big move, shares of FCX are up 7.73% YTD. Other big copper movers on Friday included First Quantum Minerals, Inmet Mining and Teck Resources.

 

 

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by jackbassteam on September 10, 2012  •  Permalink
Posted in Base Metals, China, Commodities, Economic Recovery, Mining
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Posted by jackbassteam on September 10, 2012

http://amp2012.com/2012/09/10/china-growth-hopes-rallies-copper/

Aurizon Mines (AZK) Update

English: 1 oz (Troy ounce) of fine gold Deutsc...

English: 1 oz (Troy ounce) of fine gold Deutsch: Eine Unze Feingold mit Zertifikat (Photo credit: Wikipedia)

Aurizon Mines (AZK)

Sept.7th

With the rise in the commodity price we are looking for production growth and cost containment in or selections for the new book.

Although  AZK production this year is on track, the company trimmed its full-year production guidance a bit going forward (from 155,000 – 160,000 ounces to 150,000 ounces). The stock  is reacting well to developments on the exploration front. AZK is pursuing a variety of exploration projects and presently de-emphasizing one project (Hosco) despite positive results of a feasibility study in favor of another group of properties that seems to have more potential (Heva and Hosco West). Enhancing sentiment is an announcement that the most recent analysis of the latter properties is consistent with prior favorable expectations. The company is debt free, cash per share amounts to about $1.20, and despite an aggressive capital program, the company remains cash-flow positive.

Resource estimate from Phase One Drilling – Marban Deposit

The updated mineral resource estimate integrates the results of all drill programs on the Marban deposit including those for the mineral resource estimate prepared by Mine Development Associates on December 1, 2009. In addition to 9 new holes drilled by Niogold, a total of 137 new holes and 41,270 metres have been drilled during the Phase One program between August 30, 2010 and August 9, 2011.”

Based on a cut-off grade of 0.35 grams of gold per tonne and a high value capping of 25 grams of gold per tonne, the updated In-pit mineral resources are estimated at 20,700,000 tonnes at 1.58 grams of gold per tonne or 1,053,000 ounces of gold in the measured and indicated category and at 3,780,000 tonnes at 1.60 grams of gold per tonne or 194,000 ounces of gold in the inferred category. The resources, outside of the pit shell and using a cut-off grade of 2.0 grams of gold per tonne, are estimated at 980,000 tonnes at 2.82 grams of gold per tonne or 89,000 ounces of gold in the measured and indicated category plus 800,000 tonnes at 2.68 grams of gold per tonne or 69,000 ounces of gold in the inferred category

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by jackbassteam on September 7, 2012  •  Permalink
Posted in Gold, Mining, Precious Metals
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Posted by jackbassteam on September 7, 2012

http://amp2012.com/2012/09/07/aurizon-mines-azk-update/

Paladin Energy Year End Update

Paladin Energy  (PDN : TSX : $1.38)

 August 31

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.

 

 

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by jackbassteam on August 31, 2012  •  Permalink
Posted in Commodities, Mining, Nuclear Power, Uranium, Uranium Miners
Tagged , , , , , , ,

Posted by jackbassteam on August 31, 2012

http://amp2012.com/2012/08/31/paladin-energy-year-end-update/

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