Canaccord Target C$12.20 ↑Bear Creek Mining | Graeme Currie, 1.604.643.7405
BCM : TSX-V : C$8.60 | C$352.6M | Speculative Buy, Target C$12.20 ↑
• Target price revision
Bear Creek Mining is a Vancouver-based junior exploration company under the
stewardship of Andrew Swarthout, President, and David Volkert, VP Exploration, with
Catherine McLeod-Seltzer as Chairman. Bear Creek is focused on precious metal bulk
tonnage prospects in Peru with the Corani Project as the most advanced project in their
portfolio. A second key prospect held by the company within the same Tertiary-age
precious metals belt is the volcanic hosted epithermal silver-lead-zinc Santa Ana property
in southern Peru at 120 kilometres south of Puno. The company’s largest shareholder is
Silver Wheaton Corp with 19.1% of the current issued capital.
Valuation
For valuation purposes, we will continue to use an in situ approach for valuing the
resources at Corani. At a 63:1 Ag to Au exchange ratio the Measured and Indicated
resource at Corani is now the equivalent of 4.41 million ounces of gold. Employing the in
situ value of US$90.00/oz, up from US$75/oz, this implies a value of C$466.9 million at a
0.85:1 C$ to US$ ratio. At a 63:1 Ag to Au exchange ratio the Inferred resource is the
equivalent of 630,000 ounces of gold. Employing an in situ value of US$55.00/oz, up from
US$45/oz, this implies a value of C$40.7 million at a 0.85:1 C$ to US$ ratio. We had
previously employed a multiple only to the inferred ounces derived given our view that
resources could increase materially from the ongoing drilling success at Corani. As this
project now is moving into the scoping and pre-feasibility stage, we will lower this multiple
from 2.5 times to 1.5 times, thus calculating a sum value for the inferred resource based
on an in situ method of $61.0 million, down from $83.3 million.