Welcome To the Copper Fox Metals Inc. HUB On AGORACOM
CUU own 25% Schaft Creek: proven/probable min. reserves/940.8m tonnes = 0.27% copper, 0.19 g/t gold, 0.018% moly and 1.72 g/t silver containing: 5.6b lbs copper, 5.8m ounces gold, 363.5m lbs moly and 51.7m ounces silver; (Recoverable CuEq 0.46%)
Message: A Cobre-Panama Comparison: Take 2
Your Vote:
Did you know?
You can earn activity points by filling your profile with information about yourself (what city you live in, your favorite team, blogs etc.)
I compiled analysts' NAV (Net Asset Value) estimates for Cobre-Panama based on the latest takeover offer by FM and backed into a value for Schaft Creek (100%). I also found a few interesting comments in some of the reports that I provided below. Obviously it is not a straight across apples to apples comparison but I wanted to see how it would look.
Canaccord – Potential White Knights?
With the announcement of a hostile bid, we expect Inmet to officially kick off its search for a potential white knight. We believe that several mining companies are already intimately familiar with the Cobre Panama project given Inmet’s two previous searches for JV partners. In our view, the most likely other bidder for Inmet could be Teck Resources (TCK.B : TSX : HOLD : C$35.00 TP) for the following three reasons:
1. Teck’s copper growth pipeline (Quebrada Blanca and Relincho) has been materially delayed by permitting and power issues in Chile. The company now has capacity to take on an alternative development project. Teck management has always understood the long-term value proposition of a long life asset such as Cobre Panama.
2. Teck has a relatively strong balance sheet and is in a financial position to execute a transaction in the C$5.0-6.0 billion size. The company had total cash of C$3.9 billion (as at Q3/12) with no material near-term debt maturities. We forecast average EBITDA of C$3.7 billion in the 2013-2016 timeframe.
3. Teck is very familiar with the Cobre Panama project. Until 2008, Teck was the operator of the project and had an option to acquire a 26% stake by funding 52% of the project’s total capital cost. Teck was forced to walk away from the project in late 2008 when it got into severe balance sheet stress as a result of the Fording acquisition.
BMO Research
In BMO Research’s opinion, and supported by the offer from FM and the comments from FM management, Cobre Panama remains one of the largest and most attractive of the existing undeveloped copper assets not held by a major company. While the consolidation of the global mining industry over the last couple of decades has resulted in a stratification of the companies by market capitalization, reducing the number of companies for which an asset such as Inmet could be considered “material”, the opportunity to acquire the Cobre Panama asset will likely attract a broader range of companies. In BMO Research’s opinion, this suggests a likelihood of alternative bidders, seeking to secure both production growth and control of a long-life asset. Additionally, while difficult to mathematically assess a scarcity value to an asset, it does suggest that a premium to its discounted cash flows may be warranted.
| IMN | CUU | |
| Shares outstanding | 69.3 | 422.4 |
| NAV/share | ||
| Cobre-Panama | Schaft-Creek | |
| Desjardins | 12.00 | 1.97 |
| Paradigm | 17.32 | 2.84 |
| TD | 18.29 | 3.00 |
| Raymond James | 14.27 | 2.34 |
| BMO | 26.31 | 4.32 |
| Credit Suisse | 12.59 | 2.07 |
| Average | 16.80 | 2.76 |
6 Recommendations
Loading...
Loading...
New Message
Please
login
to post a reply