Bear Creek Mining Corp V.BCM

Alternate Symbol(s): V.BCM.WT | BCEKF

Metals & Mining Industrial Metals & Minerals

Bear Creek Mining Corporation is a Canada-based precious metals producer. The Company is engaged in the production and sale of gold and silver, as well as other related activities, including exploration and development of precious and base metal properties in Peru and Mexico. The 100% owned Mercedes Gold Mine is located in Sonora, Mexico, approximately 250 kilometers (km) northeast of Hermosillo, Mexico and 300 km south of Tucson, Arizona. The Mercedes property consists of 43 mineral concessions totaling 69,284 hectares. The 100% owned Corani silver-lead-zinc property is located in the district of Corani, province of Carabaya, in the department of Puno in southern Peru. The Corani deposit sits at an elevation of between 4,800 and 5,200 meters above sea level, on the eastern side of the Continental Divide in the Andes Mountains. The project consists of thirteen mineral concessions that form a contiguous block of ground covering approximately 5,500 hectares.

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Bear Creek Mining Corp

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Post by hockeyguy123on May 15, 2014 1:12am

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Post# 22563499

BMO: Outperform rating & $3.00 target for Bear Creek Mining

According to BMO Capital Markets:

https://app.box.com/s/4tcpoy43mhlymhnti3pb

Bear Creek Mining

Stock Rating: Outperform(S)

Target Price $3.00

May 14, 2014

Santa Ana Back on Track; Upgrading to Outperform(S)

Event

Shares of BCM rose 35% today after the results of the Lima First Constitutional Court ruling affirming the company’s ownership and right to operate the Santa Ana project. BCM plans to reinitiate the EISA process with approval targeted for H1/15. Incorporating time for permitting and construction, Santa Ana could enter production in H2/16E. Based on the Q3/10 feasibility study (FS), Santa Ana is forecast to deliver 4Moz of silver annually at cash costs of $9.00/oz over 11 years for an initial capital investment of US$70M.

Impact & Analysis

Positive. While potential exists for the Peru Government to appeal the decision, BMO Research views the positive decision as a strong endorsement that may lead to the return of the Santa Ana project into the BCM development pipeline. Reinstating Santa Ana has contributed to a 42% increase in 10% nominal NPV for BCM at spot metal prices even after accounting for 1) higher capital and operating costs than those outlined in the Santa Ana FS, and 2) the deferral of Corani development post Santa Ana start-up in 2016E. BMO Research models Santa Ana annual production of 4Moz silver annually at cash costs of US$10.55/oz beginning in H2/16E. Capital costs are forecast around US$80M.

Valuation & Recommendation

Incorporating Santa Ana, BMO Research estimates a 10% nominal NPV of US$2.32 at spot metal prices. Even after accounting for the 35% increase in share price, BCM trades at 0.8x the 10% nominal NPV at spot versus peers that trade at 1.3x. In BMO Research’s view, the 38% discount to peer multiples supports further share price appreciation over the next 12 months as BCM exits the current legal uncertainty and moves toward permit approval of Santa Ana. As such, BMO Research is upgrading BCM to Outperform (Speculative) and increasing the target price to $3.00. The revised target represents 1.3x the 10% nominal NPV estimate based on spot metal prices.

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