This Reservoir Runs Deep Exec summary from the CIBC report.....
Reservoir Minerals Inc.
This Reservoir Runs Deep
As of May 1, we initiate coverage of Reservoir Minerals Inc. (RMC) with a
Sector Outperformer rating and $9 price target. We believe high grades, a
firm balance sheet, significant exploration upside and an experienced JV
partner give RMC the advantage investors seek in today's market.
Reservoir's focal region of Serbia hosts 100% owned claims and the Timok
JV with Freeport McMoRan whereby Freeport is working towards earning a
75% interest in the project. Timok hosts an impressive high-grade
copper/gold deposit, which is the basis of our RMC valuation.
We incorporate ~21 Mt of high-grade inferred ore at 5.3% Cu and 3.8 g/t
Au in our model for the Timok JV. We estimate the high-grade material
supports a very robust underground project with an IRR of 48% based on
our long-term metal prices. At spot the Timok IRR would increase to ~55%.
With liquidity being the biggest challenge, we believe future equity offerings
will remove this barrier to RMC shares. Exceptionally quick returns
estimated for Timok and good access to capital for RMC drive our SO rating.
We derive our PT by applying a 0.8x multiple to our NAV of $11.00.