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First Quantum up More Than 2%, Hits New Yr High as Credit Su
Posted 2/7/2011 10:17 AM by MidnightTrader.com Staff from Midnight Trader in Investing, Commodities
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Credit Suisse kept an Outperform rating on First Quantum Minerals Ltd. (FM.TO) and raised its Target Price to $155 from $135. FM is up more than 2% today to $132.24, and earlier touched a new year high of $132.65.
Event: "Following our Zambia operations visit to the Kansanshi mine and Sentinel project, we are increasing our target price to $155/share (from $135/share). FM is undertaking an ambitious growth initiative of expansion (Kansanshi) and new project development (Sentinel, Haquira, Ravensthorpe, Kevitsa) that we estimate will require an investment of $4.5Bln over the next six years and we have reworked our valuation to increasingly incorporate the expansion case. We maintain our Outperform rating."
View: "Positive on growth initiatives. We came away from our visit with the view that FM's pipeline of expansion and new projects will highlight management's expertise as a mine builder and operator. Although bumps along the way are likely, we continue to believe that with a strong balance sheet, high leverage to copper prices, and portfolio of quality assets, FM can maintain its position as one of the stronger names in the global copper group. In addition, FM's position as an attractively-valued copper producer with a strong growth profile can provide strategic fits for mining consolidators looking for near-term copper cash flows, low gearing, optionality on nickel markets, and development projects in proven mining jurisdictions."
Catalyst: "Expansion case doubles copper production by 2016. In our view, a number of significant milestones in 2011 should reinforce FM's expansion and exploration efforts, including Ravensthorpe plant testing (2Q11); an NI 43-101 resource estimate at Sentinel (mid-2011); copper smelter evaluation study (2H11); and start of the Kansanshi oxide expansion (4Q11). We have reworked our valuation to increasingly incorporate the expansion case with a resulting increase to our net asset value of 15% to C$150.54/share."
Valuation. "Maintain Outperform; Increase TP to $155/share. Our revised TP of C$155/share (old: $135) is based on a 60/40 weighting of 1x our NAVPS estimate of C$150.54/share and 6x FY11/12 EV/EBITDA."
Read more: http://community.nasdaq.com/News/2011-0 ... z1DHzdA2Te