RE: LOOKING AHEADkobus...
the street is not so convinced.
this morning, a highly respected analyst at Raymond James said:
Chariot Resources Ltd. CHD-TSX
RATING UNDERPERFORM 4
Target Price (6-12 mths) (C$) 0.30
Closing Price (C$) 0.37
Total Return to Target -19%
Event
During market hours on Sep-04-09, Chariot shareholders elected to keep the current management team and board of directors and also adopted a shareholder rights plan. The dissident group of shareholders led by Lukas Lundin (the individual, not the corporation) failed in their bid to effect needed change at Chariot's Annual General Meeting.
Action
We are downgrading our rating to UNDERPERFORM from MARKET PERFORM and reducing our target price to C$0.30 (prev. C$0.45). We have decreased our target P/NAV multiple to 0.30x (prev. 0.50x) to reflect the uncertainty on the future direction of the company.
Analysis
Formal sale process? How? CHD management would like to advance a formal sale process for the company in the near term. From our perspective, the uncertainty surrounding the sulphide potential at Mina Justa will likely make for a protracted sale process. In our view, the "feasibility" work to date falls far short of what is normally demanded by prospective buyers, and we believe this point was lost on many shareholders during the proxy battle. In our view, a sale process is premature, if a premium value is desired. Those with the cash would dictate the terms.
CHD shareholders may not realize that high uncertainty means low cash value for the shares.
Status quo strands the copper and strands the value. As outlined in our previous research, in its current state, without a development team, and sufficient technical definition of the sulphide potential, the path to production is highly uncertain. Furthermore, the requirement for additional feasibility level studies and the current share valuation likely precludes an easy sale of the company in our view.
Valuation
Chariot's shares trade at a P/NAV of 0.44x versus Candente (DNT-TSX MARKET PERFORM, recent C$0.42) at 0.29x, Inca Pacific (IPR-TSXV, MARKET PERFORM, recent C$0.31) at 0.14x, and Coro Mining (COP-TSX, MARKET PERFORM, recent C$0.24) at 0.20x. Our target price is based on a 0.30x P/NAV multiple (in-line with risk and liquidity-adjusted historic multiples for advanced projects).
cheers
topdop