Sign up USA
Proactive Investors - Run By Investors For Investors

BMO rates Cardero Resources with initial outperform on near-term production

BMO rates Cardero Resources with initial outperform on near-term production

 

BMO Research has given an initial outperform rating on Cardero Resources (TSE:CDU) (AMEX:CDY) as the small-cap company develops its Carbon Creek metallurgical coal deposit in northeast British Columbia. 

The bank has an estimated net present value on the company, at a 10% discount rate, of $686 million - 47.5% higher than the net present value stated in Cardero's pre-feasibility study. 

The firm's price target of 45 cents per share assumes Cardero will finance $237.5 million, or 50% of capex, at today's share price. Cardero says it is pursuing "multiple avenues" for production financing that does not involve this dilution. 

The Carbon Creek project is expected to produce around 4.1 million tonnes per year of metallurgical coal at full capacity, with first coal anticipated as early as year-end 2014. 

BMO's model assumes the project will start up in 2015, producing mainly mid-vol hard coking coal. 

"Cardero trades the lowest of the coal group on P/NPV (both BMO’s base case and spot) and EV/t of reserves, and among the lowest on implied pricing.  

"BMO would expect development companies to trade below established producers; however, it is notable that Cardero trades in line with SouthGobi, a company with significant geopolitical risk and a selling shareholder factored into its stock price."

The bankable feasibility study for the Carbon Creek project is underway, with capital costs of $475 million, or $116 per annual ton, which are seen as near the bottom of comparable projects. 

 



Register here to be notified of future CDU Company articles
View full CDU profile

Cardero Resources Timeline

Related Articles

May 21 2015
Chairman Cyril D’Silva updates Proactive Investors on his quest to locate a major, new diamond kimberlite in Sierra Leone. 
December 09 2015
The Sonora Project in Northern Mexico is host to an estimated 9mln tonnes of lithium carbonate, 5mln tonnes of which are in the higher confidence ‘indicated’ category.
June 18 2015
It’s not just the amount of fluorspar that Tertiary’s proving up that makes it such a standout opportunity.
Copyright © Proactiveinvestors.com, 2016. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC