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Analyst Actions: Credit Suisse Revises Estimates on Niko Resources; Keeps "Neutral" Rating

Not a Bazooka, but a US$14.9 mm Rabbit: "Niko announced a minor, but positive, step forward toward meeting its C$310 million convertible debt obligation by year end with the relinquishment of the Qara Dagh block in Kurdistan. The company will be freed of future obligations and liabilities associated with the property, and expects to recover approximately US$14.9 million in funds. No specific timing was provided for receipt of funds but we assume it is likely to come before year end, primarily due to the urgency of the situation."

Not Definitive, but Still Encouraging: "Although this development does not definitively address the funding challenges all in one motion, it is nonetheless encouraging at this juncture. As a refresher, Niko had indicated it was in various discussions to raise roughly US$135 million in proceeds and this transaction appears to be a part of that batch. If Qara Dagh is any indication, we could see an upcoming series of announcements."

Working Capital Needs: "Aside from the C$310 million in convertible debt due at year end, we currently continue to forecast roughly US$100 million in additional working capital requirements over the next 12-18 months to fund the exploration program and to free up the bank line for additional flexibility."

Conclusion: "The Qara Dagh relinquishment and receipt of funds is encouraging but does not alter the overall funding landscape to a large degree. With the relinquishment, we reduce our overall portfolio risked NAV to US$76 (was US$77). Without more substantial developments, we remain cautious at this point in time and maintain our Neutral rating."

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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