Raymond James's metals analyst Tom Meyer has released an update on IPR.v this morning. As it's not fair to RJ clients, i'm not going to reproduce the inner contents of any Raymond James analysis note itself,but it is ok to paste up the covering mail that came this morning.
I'm not joking, people. This is a buy. Sorry, it's a STRONG BUY. Meyer sez so.
Inca Pacific Resources Inc. IPR-TSXV
RATING STRONG BUY 1
Target Price (6-12 mths) (C$) 4.00
Closing Price (C$) 1.90
Total Return to Target 111%
Event
We have updated our model for the recent equity financing. The company
raised gross proceeds of C$28.2 million from the issue of 17.6 million
common shares at C$1.60/share on May-8-08. We are reducing our NAV per
share estimate for Inca Pacific Resources to C$6.06 (prev. C$7.90) to
account for the dilution. Approximately US$18 to US$20 million of the
cash raised has been earmarked for the US$402 million capital cost of
the project.
Action
We reiterate our STRONG BUY rating and C$4.00 target price on Inca
Pacific's shares.
Analysis
Inca Pacific has recently completed a number of important steps in the
progress of its Magistral project: 1) submission of the ESIA, and 2)
securing incremental project financing. The Government of Peru (GOP) has
acknowledged the "bankable" feasibility study delivered by the company
on Jan-2-08. IPR now has until May-28-08 to respond to observations by
the GOP regarding "risks" identified by an independent engineer. In our
view, news flow on a number of data points and milestones should provide
positive catalysts for Inca Pacific's shares:
- Start of the access road upgrade - 3Q08
- Anticipated receipt of permits and ESIA approval - 4Q08
- Closing of project financing and the start of construction - 1Q09
- Start of production - 1Q11
Additionally, positive copper market fundamentals, the potential for M&A
activity, and Magistral's molybdenum exposure also add to the
attractiveness of the Inca Pacific investment case.
Valuation
In our view, Inca Pacific's shares are inexpensive and trade at a P/NAV
of 0.31x versus the peer group of copper development companies at 0.58x.
Our C$4.00 target price is based on a 0.70x P/NAV target multiple.
Tom Meyer, P. Eng., CFA
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2 comments:
But Otto, isn't Raymond James one of the underwriters for IPR's stock offering? What else but great glowing things could the analyst from Raymond James say?
True dude, but Raymond James are investment bankers for African Copper and co-led a $65m placement for ACU, but Tom Meyer later called the stock a sell.
I've met Meyer, and he's not the kind of analyst who'd pull any punches...but hey, that's just me. The 1st paragraph is cold fact.
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