canaccord today
Taseko Mines Limited | Orest Wowkodaw, CA, CFA, 1.416.869.3092
TKO : TSX : C$4.46 | C$812.0M | Buy , Target C$5.40 ?
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• Revising estimates based on a higher copper price outlook; maintaining BUY
rating and increasing target to C$5.40
Event
We have updated our estimates to reflect a higher copper price outlook in the near-to-
medium term and the company’s recently released Q4/09 production results.
Impact
Mixed. While Q4/09 production was below expectations, this was more than offset by
higher copper prices.
Action
We are maintaining our BUY recommendation and increasing our target to C$5.40 (from
C$4.50) per share. Our revised C$5.40 target is based on a 2010 EV/EBITDA multiple of
4.0x + in-situ value for the company’s very large but undeveloped Prosperity project. The
BUY rating is supported by the company’s near-term production growth profile, leverage to
an improving copper price, and optionality on the Prosperity project. Executing on
expansion plans while controlling operating costs remains the company’s largest near-term
challenge.
Valuation
Taseko is trading at 6.4x and 4.3x our 2010E and 2011E EV/EBITDA estimates and at a
13.7% discount to our revised 10% NPV of C$5.17 per share, which compares to our mid-
cap base metal producer coverage universe of 5.4x, 4.2x, and a 15.3% discount to NPV.