Credit Suisse says: "$150mn should cover Phase 1, but likely
more to come; Revising Estimates and Lowering Target Price to
C$1.40 (from C$2.10)."
"PDL announced closing of a US$130mn secured term loan from
Brookfield Capital Ltd, along with a $20mn subscription for flow
through shares that will be placed in two tranches. $150mn in
proceeds will be used to i) fund the ongoing Phase I expansion at
LDI, and ii) close out $72mn in senior secured notes (including a
10% penalty). Separately, the $60mn July 2013 working capital
facility has also been pushed out by 12 months.
"It is a credit to management that PDL has managed to raise this
much capital in such a tight market, but it hasn't come cheaply.
The 15% nominal interest rate on the new $130mn facility increases
to 19% in the (likely) event that interest payments are accrued for
the first 2 years of the loan.
Management strategic review of the Phase 1 project (3,500 tpd
via vertical shaft) is ongoing, and we expect an update on this
project in July with the financial results. By September we hope to
learn more about PDL's longer term growth aspirations, which might
include a Phase 2 expansion (5,500tpd) of the Offset Zone, further
development of the Roby Zone, a SE Extension of the Offset Zone or
surface opportunities such as a push back of the open pit or North
"Our target price remains based on a risk-weighted NAV, but
falls to C$1.40/share (from C$2.10). PDL trades at 10.5x 2014
EV/EBITDA, compared to Stillwater (
) which our estimates put at 7.5x 2014 EV/EBITDA.2013/2014/2015 EPS
estimates to (C$0.09)/C$0.06/C$0.09 from (C$0.04)/C$0.05/C$0.07
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