FR values PML at C$ 0.77 Panoro Minerals Ltd.
(TSXV: PML / OTC: POROF / BVL: PML)
Wheaton Precious Funded Copper-Gold Junior in Peru with Hudbay as the Largest Shareholder - Initiating Coverage
BUY
Current Price: C$0.12
Fair Value: C$0.77
Risk: 5
Sector / Industry: Junior Mining Click here for more research on the company and to share your views
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*See last page for important disclosures, rating and risk definitions. All figures in C$ unless otherwise specified.
Highlights Panoro Minerals Ltd. (“company”, “PML”) is a copper focused junior with nine projects in Southern Peru. Hudbay Minerals (TSX: HBM) owns 12%, and is the largest shareholder. PML’s portfolio includes two advanced stage assets - Cotabambas (copper-gold) and Antilla (copper) – with a combined After-Tax Net Present Value (“AT-NPV”) at 7.5% of US$989M, per Preliminary Economic Assessments (“PEA”) completed on the projects. Panoro’s Enterprise Value (“EV”) of $28M is just 2% of the combined AT-NPV. Cotambas and Antilla have a 3.9 billion pounds (“Blbs”) copper equivalent indicated, and 6.6 Blbs inferred resource, which also includes 0.9 Moz indicated and 3.4 Moz inferred gold. PML’s shares are currently trading at just ¢0.4 per lb (U.S.) versus an average of ¢2.4 for companies with large copper focused projects in the Americas. It is estimated that Cotabambas, PML’s largest project, will produce 131 Koz gold equivalent (gold + silver), and 155 Mlbs copper per year, or 272 Mlbs copper equivalent, in the first 10 years of production, at a cash cost of just US$0.59/lb at spot prices. The initial CAPEX is estimated to be US$1.5B. Wheaton Precious Metals (TSX: WPM) has committed to provide US$140M in financing. In addition to its two flagship assets, PML maintains royalty interests in projects sold to Hudbay and Mintania, a Peruvian producer. Another project is joint ventured with Japan Oil, Gas and Metals National Corporation (JOGMEC). Over the next four years, PML is expected to receive approximately US$17M from previous asset sales to Hudbay and Mintania, the joint venture agreement with JOGMEC, and the streaming agreement from Wheaton. As a result, PML will not have to do any equity financings in the near-term. Risks Relatively larger projects, such as Cotabambas and Antilla, tend to have higher CAPEX. As porphyry projects are of relatively low-grade, they are highly sensitive to copper prices. Wheaton Precious has an option to terminate the financing agreement. Project financing on Antilla may take longer than