RE:Rumor has Taesko
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February 27, 2014https://business.financialpost.com/2014/02/27/taseko-mines-expected-to-seek-acquisition-after-negative-new-prosperity-ruling/
Taseko Mines expected to seek acquisition after negative New Prosperity ruling
By Jonathan Ratner
Taseko Mines Ltd. shares took another hit on Thursday after Canada's environment minister ruled that its New Prosperity copper-gold project in British...
Taseko Mines Ltd. shares took another hit on Thursday after Canada's environment minister ruled that its New Prosperity copper-gold project in British Columbia may not go forward due to the likelihood of potential environmental damage.
This leaves the company with a couple of choices, including submitting a revised proposal or seeking an acquisition to fill its growth pipeline, according to Jackie Przybylowski, an analyst at Desjardins Securities.
Ms. Przybylowski made no changes to her estimates on Taseko as a result of this news, as she attributes no value to New Prosperity.
"Given the expected continued strong opposition to the project from some First Nations and NGO groups, we remain skeptical that the project will be approved in the foreseeable future," the analyst told clients.
However, Ms. Przybylowski continues to rate the stock a buy with a $4.25 price target, as Taseko's Gibraltar copper-molybdenum mine in south-central B.C. continues its successful ramp-up.
The stock fell more than 6% to $2.22 on Thursday.
The company's flagship mine continues to operate well and generate cash, with the analyst forecasting operating cash flows of $77-million, or 40¢ per share, in 2014. As a result, she expects Taseko will seek an acquisition to fill its near or medium-term growth pipeline.
"Curis Resources Ltd., in which Taseko holds a roughly 17% stake, could be a target," Ms. Przybylowski said, noting that Curis is working to develop the Florence copper deposit, an advanced-stage in situ copper recovery project in Arizona.
The Aley project could represent Taseko's next growth vehicle, but Laurentian Bank analyst Christopher Chang believes Yellowhead Mining Inc. and Curis remain on the company's acquisition radar.
Taseko currently has a 10% ownership stake in Yellowhead and had about $83-million in cash at the end of 2013.
"Although Taseko plans to press on with an existing judicial review application to resume development plans for New Prosperity, we believe the company will likely focus its attention on alternative growth opportunities both organically and inorganically," Mr. Chang told clients.
He rates Taseko a buy with a $3.80 price target.