Mixed signals from Scotia
Scotia analyst put up a note after a visit to Arizona operation, saying some nice things re Pinto Valley production of 142 mm lbs for 2016 at a cash cost of $1.78..... Price target of $1.20 .... but then kinda rains on the parade by predicting a Q4 loss of 3 cents per share and cash flow of a penny.
For 2016, the earnings estimate is 1 cent per share, but more encouraging, cash flow of 30 cents.
At $2 copper, he sees sufficient liquidity to see the company thru to 2H/17... but then goes on to advise that the senior debt covenant of less than 3:1 vs trailing twelve month EBITDA would be broken "prior to this".
Altogether, he paints a very mixed picture. I'm on the sidelines right now, scratching my head after making a few mildly profitable trades of late. Still have some HBM but it's pretty much in the same boat re the covenant situation. If copper sees $1.95 ....gulp.
Has anyone got any ideas for an appropriate hedge short position? I see that BMO has SCCO pegged at low 40's p/e for '16 & '17, cash flow multiples in the 23 range, both years. What's a good ratio