Candente Copper (TSE:DNT) still requires a joint venture partner and a financing for its Canariaco Norte project, which will most likely dilute current shareholders further, according to analysts at Dundee Capital Markets.
Dundee reiterated its sell rating on the company, and 10 cent per share price target, saying the company's story has not changed, despite announcing a private placement to raise total proceeds of C$500,000. Candente had C$186,000 in cash as of September 30, 2014.
"The private placement represents a 4% share dilution (10% including warrants) and lowered our NAV by 22%," wrote Dundee analyst David Charles, to $1.40 per share from $1.79 previously.
"While the NAV is attractive, we previously noted that Candente Copper would (and will) require financing or a JV Partner and this will most likely dilute current shareholders further," he added.
The stock was trading at 9 cents per share on Wednesday, down over 5 percent, giving it a market cap of $12.9 million.
Dundee acknowledged that Candente has "interesting assets" in Peru, but with copper trading near $2.70 per pound, it believes financing a project of Canariaco Norte's size for a junior explorer "will be a real challenge in these markets as the theme of junior mining companies' inability to access capital has not changed."
The copper project, which has a pre-feasibility study completed, has an estimated capex of $1.6 billion.
"We also reiterate that aside from financing, the social license remains a key issue for Candente Copper and its Canariaco project in Peru," Charles said.
Aside from Cañariaco Norte, Candente also owns two adjacent porphyry targets.