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

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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.

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This article appears in: Investing , Commodities

Referenced Stocks: PL

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