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Analyst Actions: Credit Suisse Lifts Target, Lowering Estimates on Alamos Gold

Alamos announced it will not take up any ARZ shares tendered to the offer: "AGI announced that it will not extend its offer for Aurizon Mines Ltd. (ARZ), expiring yesterday at 5pm. Additionally, AGI will not take up any ARZ shares that are tendered to the offer."

Alamos unwilling to pay C$27.2M break fee: "Alamos noted that with the break fee, the cost of acquiring Aurizon was simply too high. AGI had unsuccessfully approached the BC Securities Commission to cease trade the break fee entered between Hecla and ARZ."

We increase our TP to $17.50 (from $17.00), maintain Neutral: "Removing ARZ from our model (Please refer to our full report for EPS revisions) results in an increase to our OpCFa valuation to $18 (from $17), based on 17x our 2013 OpCFa est. of $1.08 (from $0.98/sh). Our NAV-based TP remains $17 and is based on 1.20x our DCF of $11.48/sh, we add net cash of $3.02/sh at par. Our multiples currently reflect some near term M&A overhang on the stock following the unsuccessful ARZ bid. We expect the M&A overhang to dissipate over time. We are lowering our 2013/2014/2015 EPS estimates to $0.85/$0.73/$0.74 (from $0.98/$1.03/$0.78) respectively."

No ARZ removes Credit Suisse concerns over the potential deal: "We were cautious over a potential merger due to asset integration issues (rebasing junior expectations to acquirer standards) with the added burden of a distressed underground asset. We are far more constructive on an unencumbered AGI, as it has strong growth through Agi Dagi and Kirazli in Turkey, which is well funded with $353M of cash and equivalents at 2012YE. In a declining gold price environment, AGI is a relatively safe bet with its projects fully funded and all-in sustaining costs that Credit Suisse estimates as $823/oz in 2013."

Moving forward, focus for AGI back on Mulatos and Turkey deliverables: "Alamos' guidance is for 180-200kozs from Mulatos at $415-$435/oz cash op. costs. Credit Suisse est. is 207kozs at $419/oz. AGI has targeted Q1/13 and Q2/13, respectively, for approval of the Kirazli and Agi Dagi EIAs."

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

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

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