RE: Raymond James - Ouperform rating Here is the abstract of the 35 pg. report by RJ dated 3 Oct 2012.
Valuation & Recommendation
We are re-initiating coverage on B2Gold Corp., with an Outperform rating and a C$5.50
target price assume that the proposed merger between B2Gold and CGA Mining
will receive shareholder approval (anticipated by year-end). We value the combined
entity using a 10.0x multiple to our 2013E CFPS estimate and apply additional
attributable value to B2Gold’s development and exploration assets.
In our view a 10x P/2013E CFPS multiple adequately captures the value of B2Gold’s
Nicaraguan production base and production growth opportunity presented by acquiring
the Masbate mine in the Philippines. We recognize the aggressive production growth
opportunity offered by the company’s flagship La Libertad mine and management’s
stellar track record in delivering value by (1) growing production, (2) maintaining a hold
in operating costs, and (3) delivering on annual production and cost guidance. We await
management cost and production guidance for Masbate, and estimate Masbate’s cash
flow contribution assuming steady-state 2Q12 production and cost assumptions.
A 10.0x P/2013E CFPS multiple compares to our covered producer peer group P/2013E
CFPS average of 9.9x (ranging from 3.9x to 16.3x) and a target price CFPS average of
11.6x (ranging from 3.8x to 19.9x)