The following is from Mackie Research Capital – Morning Comments

EXCELSIOR MINING CORP. – (MIN – CAD$0.50)
Target Price: CAD$1.85 Recommendation: SPECULATIVE BUY

Low Cost, Undervalued Copper Company

We are initiating coverage on Excelsior Mining Corp. with a SPECULATIVE BUY recommendation and 12-month target price of C$1.85. The company’s flagship Gunnison Copper Project lies within the copper porphyry belt of Arizona.

Large Resource: The North Star deposit contains an NI 43-101 compliant indicated resource of 3.2 billion pounds of oxide copper and inferred resource of 0.88 billion pounds of oxide copper. This is sufficient for over 20 years of production at a run rate of 70 million pounds Cu per annum.

Accessible Deposit: Electricity, large water body, highway, railway, skilled labour, and mining infrastructure are all available in the vicinity of the deposit.

Low cost project: The deposit’s characteristics are amenable to ISR mining methods, which implies lower capital and operational costs. Initial capital costs of $240 million and cash costs (including royalties) of $0.96/lb Cu are estimated for this project and lie at the bottom of the lowest quartile of international copper mining operations.

Cheap valuation: The company screens very attractively in terms of EV to Total Resource, Total Capital to Resource, Total Cost to Total Resource and Price to NAV multiples relative to its peer group average.

Near-term catalysts: The company is expected to release its metallurgical test results in September 2011 and a Preliminary Economic Assessment (PEA) report in Q4/2011. We expect the PEA to show robust economics for the project and help unlock the company’s value.

Conservative target price: We have used conservative assumptions, including a 50% recovery rate and a 12% discount rate, to derive a NPV for the project of $305 million. This equates to an IRR of 37%. Adjusting our project’s NPV estimate for working capital, corporate overhead, and further risking it by 50%, result in conservative target price of C$1.85 on a fully diluted basis.

By Barry Allan – 2011/09/07

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I would like to point out their target price is a conservative one in their eyes! -PG