Credit Suisse has released an analyst report on Mercator
Minerals. It said:
Event: "ML reported 4Q12 production results from Mineral Park of
10.9Mln lbs copper and 2.9Mln lbs molybdenum. Results compare to
our estimate of 10.4Mln lbs copper and 2.8Mln lbs molybdenum. Our
FY12/13 EPS estimates go to $0.01/0.07 (from $0.00/0.13) reflecting
4Q12 operating results and revised FY13 operating assumptions."
View: "4Q12 production in-line; FY13 production guidance bit
light of expectations. Mineral Park mill throughput rate of 45Ktpd
was 6% above our estimate (42Ktpd) with copper/molybdenum grades
in-line with expectations at 0.14/0.04%. Copper/molybdenum
recoveries were strong at 83.1/85.5% (vs. our 80/81%). FY13
production guidance: ML expects FY13 production of 93-102Mln lbs
copper equivalent, which includes 41.5-46.5Mln lbs copper (vs. our
prior estimate of 51.1Mln lbs) and 11-12Mln lbs molybdenum (vs. our
prior estimate of 11.6Mln lbs). ML expects improvement in
throughput rates through FY13 as MP continues its optimization,
with metal grades and recoveries similar to 4Q12 levels. ML
forecasts cash costs to average $2.25-2.50/lb copper and
$8.55-9.45/lb molybdenum on a co-product basis (vs. our prior
$1.83/lb and $7.88/lb estimates, respectively). Capital
expenditures in FY13 are expected to total $15Mln ($13Mln Mineral
Park, $2Mln El Pilar) - in-line."
Catalysts: "Balance sheet liquidity improving. ML recently
announced a number of steps to improve its near-term and
medium-term working capital position and reduce financing risks,
including a restructured Mineral Park credit facility ($92Mln), and
refinanced El-Pilar pre-construction facility ($30Mln) and equity
offering (bought-deal basis). We estimate ML will exit FY12 with a
cash balance of $23Mln and generate $23Mln in FCF based on our FY13
copper and moly price assumptions of $3.25/lb and $12.50/lb,
respectively."
Valuation: "Our TP of C$1.45 is based on a 0.8x target multiple
on P/NAV. Our target multiples are at the low-end of the peer group
(0.8-1x) to reflect ML's relative strategic position within the
peer group of North American base metals producers."