Analyst Actions: Silver Wheaton Corp Target Lowered $6, But Keeps Outperform at Credit Suisse


Credit Suisse on its "ABX Takeaways: More Conservative on Pascua Lama; SLW Still Pricing In Spot Silver; Lowering Ests & TP to C$38 (from C$44)"

Event: "Following Barrick Gold Corp.'s (ABX, US$18.01, OUTPERFORM, TP US$38) release of 1Q13 financial results, we are pushing back our start-up date for the Pascua Lama ( PL ) project by six months to 2Q15. SLW has a 25% LOM silver stream, which accounts for 15% of our revised NAVPS. As a reminder, ABX suspended construction work on the Chilean side of PL following a court order/injunction requesting suspension pending a hearing on a constitutional rights action filed September 2012."

Impact: "Potential for significant delay; ABX working on an alternative development plan. The PL court action alleges non-compliance with the environmental requirements of the project's Chilean environmental approval. ABX is still seeking clarity on the legal/regulatory aspects of the case and is unable to assess the impact on the schedule of the project at this time; however, ABX is in the early stages of evaluating an alternative plan to accelerate development of a smaller pit in Argentina to provide about six months of initial ore production during commissioning and ramp-up."

Catalyst: "ABX noted that suspension of the PL project is a possibility in light of legal/regulatory uncertainties and current commodity prices. We estimate each six-month delay at PL impacts NAV by 1%, with no PL (worst-case) lowering NAV by 15% (after credits)."

Valuation: "Lowering TP to $38. Our revised TP of C$38 (from C$44) is based on an equal weighting of 1.1x (previous 1.2x) our revised cash-adjusted NAVPS (C$27.61) and 23x FY13/14 CFPS ($1.90) under the Credit Suisse 1-Yr target silver/gold price scenario of $28/1520 per ounce (previous $30/1600 per ounce). We are lowering our 2013/2014/2015 EPS estimates to C$1.29/C$1.16/C$1.24 (from C$1.31/C$1.20/C$1.33) respectively."

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.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

Referenced Stocks: PL

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