Analysts Differ on Trelawney Takeover by IAMGOLD

Me & Prof. Trelawney
Me & Prof. Trelawney (Photo credit: PunkJr)

Despite the nice bump in the last couple of days, Trelawney
(like a very long list of other junior golds) is still, even
with the nice offer on the table, significantly cheaper than
where it was in the good old days of six, seven or eight
months ago.

Cannacord Positive
As far as the take-over by IAMGold, Canaccord’s Steven
Butler is happy as he writes, “The offer values the Cote
Lake resource at approximately $80/oz.” He continues,
“Overall, we view this as a positive acquisition: it lowers
IMG’s geographic risk profile (pro forma resource base of
35% North America vs. 18% pre-deal); Cote Lake represents
a large asset that as a bulk mineable deposit could produce
in the range of 350,000-400,000 oz/yr. by 2018; the acquisition
price appears reasonable (justified by our 10% scoped
DCF range), with the optionality to improve value by future
project de-risking, and the announcement partially removes
a prevailing M&A overhang on IAMGOLD’s shares.”

TD Says No
TD Securities suggests that the deal “may add a large project in a politically safe jurisdiction (Ontario), but removes IAG’s balance-sheet
flexibility and options. Firm calls the buy a “missed opportunity”,
noting IAG could have acquired higher-quality nearterm
production rather than an early-stage, low-grade project
with potentially high operating costs, and technical and
permitting challenges.”
Meanwhile, one thing that is becoming more and more
bothersome about the mining and exploration business is
that governments everywhere seem to be taking much
longer to approve projects and everyone associated with
developments have their hands out.

Copper Update 
This is probably one of the reasons that copper prices
are hanging in there at rather tasty levels, despite all the
weak economic news out of North America and particularly
out of Europe. It is getting tougher and tougher to get copper
mines and anything else into production these days.

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