Dundee target raised to $1.00
From Michael Berry's Morning Note last week, link
here.
Something good is finally happening to Quaterra shareholders. Last Friday the stock traded 1.2 million shares. About 1/3 of the shares traded were bought be insiders including management and directors.
This is obviously a good sign because the stock has been under great pressure for quite some time.
It is also notable to note that since June 16th more than 5 million shares have been traded (read that sold). In fact we are aware that one individual was responsible for most of this selling.
It is also notable that we have seen a PEA with an open pit resource of 110 million ounces of silver at Nieves in Mexico and some surprisingly high grade gold intercepts at Herbert Glacier gold discovery in Alaska. Quaterra owns 50% of the Nieves discovery and 35% of the Herbert Glacier discovery. These discoveries alone placed the NAV of Quaterra’s shares at more than $1.36 per share according to the Joseph Gallucci an analyst at Dundee.
On September 19th Dundee analyst Joseph Gallucci wrote, “After including the results of today's PEA in our model we estimate that- if Nieves starts ramping up production in 2015- the project's NPV would be $126.5mm which increases our NAV per share by $0.03 to $1.36 from $1.32. We also estimate that Nieves has the potential to generate FCF in the 1st year of production. This slight increase to our NAV does not materially affect our target price; however, it is notable that, at current levels, QTA is trading at roughly the same market cap as our valuation for Nieves.” …
“QTA is among the least expensive stocks in our coverage universe, at 0.27x NAV it is well below the average of 0.5x NAV for our universe. We maintain our BUY rating and raise our 12-month target price to $1.00/share”
It would seem then that insiders have seized this opportunity to be in the market. In yesterday’s trading 357,000 shares changed hands pushing the stock was up 14% to $.44.
We are a buyer of this stock at $.44 within 48 hours of this Morning Note.