POM, FRA and DM - Analyst CoveragePolymet, Franconia and Duluth – Analyst Coverage
Encouraging to see all these companies getting some independent, and not paid-for Analyst Coverage. Quite an achievement for the two juniors FRA and DM.
Polymet were a BUY with $5 price target (currently $3.94)
Franconia were a SPECULATIVE BUY with $4 price target (currently $2)
Duluth were a SPECULATIVE BUY with $5 price target (currently $3.04)
If we are to rely on the Comark targets, that suggests from today, the biggest upside lies with Franconia, who have been affected by news delays.
According to Stockhouse, current market caps are POM –$538m, FRA –$115m and DM-$201m.
Also, note that the Franconia $4 price target only includes 2 of their 3 properties. The Spruce Road 43-101, due any day, is expected to double FRA’s resource value over night. As explained by Cormark “ Our target price of C$4.00 is based on a 1xNAV multiple. We believe there is significant potential for upside in the NAV in the near future with the two key catalysts being the updated scoping study and the resource estimate on the Spruce Road deposit is released.”
Am aware that POM and DM, also, continue to upgrade their resources – but FRA’s third property with doubling is incredible.
What will the FRA price target be then?
I like all of these companies although I only hold Franconia.
-Polymet because they are leading the way and are closest to production.
-Duluth Metals because they are moving so quickly, have good resource, promotion skills and experienced management.
Franconia are my favourites because:
-As original shareholder, have seen my investment multi-bag from around 20 cents and am confident of further upside
-Like the management – there is no hype just steady progress. (Brian Gavin for example, Director of Minera Andes who recently have gone into production with Silver/ Gold Mine in Argentina )
- They have the “largest land package of the four companies at 6070 hectares. This is significantly greater than the other packages with PolyMet at 2834 hectares and Duluth Metals holding 1072 hectares”. FRA own the biggest share of the third largest nickel resource in the world. When FRA eventually progress beyond their first three properties the potential value is astounding.
- They are also a pure Exploration play and are hopeful of a major Copper find, in Elephant territory at Red Knoll, Arizona
smilewithme
Cormark Securities
Justin Reid, Mining Analyst
August 14th
Duluth Mineral Belt
Executive Summary
We are initiating coverage on three companies in the complex: PolyMet Mining (POMTSX), Franconia Minerals (FRA-TSX-V), and Duluth Metals (DM-TSX). Our targets are based on a long-term copper price of US$1.50, a nickel price of US$6.50, a US$0.95 Canadian dollar and a 1xNAV multiple with varying discount rates to take into account project risk.
We are initiating coverage of PolyMet with a C$5.00 target and a Buy recommendation. We recommend PolyMet for exposure to an advanced stage project with upside potential from their strategic asset the Erie Plant. The project is also the largest scale project in the complex with significantly less technical risk due to the fact that it is an open pit operation with an existing mill. PolyMet will be the first into production, with production commencing in 2009.
We are initiating coverage on Franconia with a C$4.00 target and a Speculative Buy recommendation. We recommend Franconia for the company’s strong position with the largest land package in the region and their potential for expansion from the three deposits contained on their property.
We are initiating coverage on Duluth Metals with a C$5.00 target and a Speculative Buy recommendation. We recommend Duluth Metals based on their highly experienced management and upside potential to their already large deposit.