Two points of particular interest. Firstly numis believe $60/oz to be fair. Should CNR add say 300koz this year and take the total to around 2.7m oz that would value us at roughly £2.20/share at $60/oz.
Secondly, it is worth noting that they hope 'to complete permitting by 2016'. Evidence there that a deal can be completed well ahead of permits being attained. CNR continues to be a live takeover target!
Timmins has agreed to acquire Newstrike Capital for C$140m ($113m or $60/oz). The combined company will be owned by 63% Timmins and 37% Newstrike. The deal comes a month after the acquisition of Caballo Blanco from Goldgroup. . Advanced stage. Newstrike completed a PEA on Ana Paula in late 2014: M&I resource 1.85Moz at 1.4g/t Au. 8.2yr LOM, 2.6 strip, 2.2g/t Au head grade, average 116koz pa Au, 957koz over LOM, $164m capex including contingency, cash cost $527/oz ($486/oz net silver). The PEA NPV (5%) at $1,300/oz was $232m with a 33% IRR. Timmins believes there is scope to improve significantly on the PEA numbers. Neat fit. Ana Paula expands the footprint in Mexico, a comfortable jurisdiction for Timmins. It provides a low-cost growth profile, and along with Caballo Blanco, boosts group production from 120koz to >c.350kozpa and drops AISC by 20% or $200/oz to $795/oz by 2019, according to our estimates. M&I resources and grade are boosted by 75% and 34% respectively, for a total resource of 6.6Moz. The operation would be an attractive high-grade, low strip open pit, although there is scope to improve the current 75% recovery. The PEA plan is flotation/CIL but Timmins will undertake more test-work.
Flexibility. Timmins believes it can optimise the PEA and complete permitting by the end of 2016. Based on this, we estimate first production in 2018. The current plan would see Caballo Blanco come on stream first (our estimate mid-2017) although given the tough permitting task, we would not be surprised if Ana Paula ended up in production first. With San Francisco generating cash, Timmins has some flexibility in this regard. Value & risk. We think the acquisition cost is fair
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.