OTCPK:CPPMF - Post by User
Post by
goofenoffon Nov 13, 2011 10:16am
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Post# 19233279
From Raymond James Report
From Raymond James Report3Q11 Preview - Ramping-Up and Focused on De-BottleneckingEventCopper Mountain will release its 3Q11 results, its inaugural quarter ofproduction from its namesake mine, after market close on Monday, Nov-14-11.ActionWe maintain our Outperform rating and C$7.50 target price. We recommendinvestors continue to buy Copper Mountain’s shares as it transitions from adeveloper to a producer and begins generating positive cash flow. We also view the company as a potential takeover target due to its majority ownership of a sizeable producing copper mine in mining-friendly Canada. Analysis3Q11 preview – We have updated our model to reflect our expectations for theinaugural sales in 3Q11, and the expected concentrate shipments in 4Q11. OurNAV declines slightly to C$9.30 (previously C$9.49). We forecast EPS in 3Q11and 4Q11 of C
.03 and C
.17, respectively. This compares to consensusestimates of C
.03 and C
.23, respectively. In our view, the 4Q11 consensusestimate is too aggressive given that the mine is still ramping-up and is working through troubleshooting, as is typical of mining operations at this early stage. Ramp-up proceeding and bottlenecks identified – From our discussions withmanagement the mill is currently operating at close to 70% of design capacity(35,000 tonnes/day). While progress has been slower than management hadhoped, the challenges that must be overcome to achieve 100% capacity appearresolvable, and we have confidence in management’s ability to find solutions ina timely manner. Most areas of the mill are operating well, including thecrusher, secondary grinding, and the flotation circuit, and so far the head gradereconciliation has met the expectations in the mine plan.