Analyst Actions: Inmet Mining Corp Estimates Raised at Credit Suisse

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Credit Suisse says "production Outlook In-Line; Las Cruces Continues to Deliver; Raising Estimates"

Event: "IMN released FY12 production results and FY13 production and cash cost objectives for its operating mines."

View: "In-line; Las Cruces delivers another strong quarter. IMN expects FY13 copper production of 103.6-116.3Kt - in-line vs. our 111.2Kt. FY13 zinc production of 56.2-62.4Kt was also in-line vs. our 58.8Kt. FY13 cash costs are expected to average C$0.91-0.97/lb vs. our C$0.87/lb. FY13 guidance includes Las Cruces production of 68.5-72Kt with cash costs expected to average C$1.10 -1.16/lb - both largely in-line with our expectations. 4Q12 production also in-line. IMN also reported actual FY12 copper production of 111.7Kt, which implies 4Q12 production of 27.6Kt - in-line vs. our 27.9Kt, with Las Cruces delivering another solid quarter with copper production of 17.3Kt (or 96% of design capacity). We are increasing our FY12/13/14 EPS to C$5.41/C$5.37/C$4.46 from C$5.14/C$4.23/C$3.56 as we are now capitalizing interest costs associated with Cobre Panama (previously expensed). The EPS changes do not impact our net asset value ( NAV ) or target price."

Catalysts: "BoD to make formal recommendation by January 24th. The IMN BoD Special Committee has been engaged in a dual process to evaluate the FM offer (C$36 cash + 1.6484 FM shares) and explore all strategic alternatives to create value for IMN shareholders. The Special Committee is expected to release a formal recommendation to IMN shareholders by 24 January 2013."

Valuation: "We continue to recommend holding onto IMN shares on the prospects for a higher bid valuation. Our TP of C$80/share is based on 1x our NAVPS of C$79.97/share. We estimate a potential combination with FM is breakeven to FM's NAV at C$80 per IMN share using our expansion-case assumptions for CP (C$7.1Bln capital costs, 10% discount rate) and assuming no synergies or cost savings at Cobre Panama."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

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