National bank target $0.35 National Bank's target is $0.35 (downgraded from $0.40). Link: https://www.jagsreport.com/2012/09/research-analysts-price-target-changes-for-september-18th-cdi-cs-cum-erf-far-fdx-fm-gei-gga-hbm/
Here is my target, with the following assumptions: discount rate of 12% and pre-tax (b/c we have in excess of $100 mm of tax pools at this point).
1. Questionable whether Donner will have sufficient cash to repurchase the stream. Assume they do not. PV of ~9 year mine life of ~$12 mm cash flow / annum (copper ~$3.50) is ~$65 mm. Production starts within a few months so no further discounting necessary.
2. PV of CSI stream, assuming 50% repurchase, is ~$25 mm. I'm assuming a grade of ~4.5 g/t, which is a little bit above the previous NI 43-101, but below a lot of the intercepts listed on the CSI website. If we do not assume the repurchase takes place, the PV is ~$40 mm (at time of production). We are about a year out from palladium production, if I understand correctly, so discount the $25 mm to $20 mm.
3. Total investment in NDX, TER and RDA is ~$51 mm. Assume recovery of 50% of investment by divesting assets, or $25 mm. Although these dispositions would take place in the future, I think there is a good chance they dispose of these assets in excess of 50% of what they paid the streams for, so I'm not going to discount these amounts any further.
4. Tough to value TBD. At $5.00 gas we are talking about an investment that has a PV of over $100 mm. At $2.50 gas we are talking about something worth about $25 - $30 mm. Call it $30 mm for the optionality upside... at $6.00 gas this thing earns us over $30 mm for > 15 years.
5. Current cash on hand of $40 mm plus $2 mm fair value of Donner shares less $10 mm payment due to TBD ($3 mm paid after most recent quarter) less $5 mm due to CSI for stream for total cash of ~$27 mm.
$65 mm (Donner) + $20 mm (CSI) + $25 mm (investment recovery) + $27 mm (cash on hand) + $30 mm (TBD) = $167 mm = ~$0.52 / share is what I would say this stock is worth today
It's sad what happened to RDA, NDX and TER. For a $22 mm investment in NDX that stream was set to earn us $8 - $12 mm for > 20 years. For $15 mm in TER that stream would have earned us $6 - $7 mm for >12 years, assuming modest declines. Present value these things, the NDX stream was worth $80 mm, TER about $30 - $35 mm.