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I say things on Twitter

5/16/08

I'm not the only dude who says "buy Inca Pacific", by the way

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.

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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