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Northern Dynasty Minerals Ltd. Message Board

  • larrystorch larrystorch Aug 1, 2007 10:17 PM Flag

    Raymond james says sell IVN and buy NAK

    Northern Dynasty Minerals (NDM-T)
    STRONG BUY
    Target C$25.00

    Buy NDM � back of the envelope (due to poor sentiment) NDM shares likely to move to ~C$20.91 � upper end of range (Ivanhoe like performance) would be minimum C$32.63 all the way to C$36.55

    Excellent news - Anglo enters as 50:50 equal partner in the world class Pebble project in Alaska � entry cost is US$1.425 bln in staged payments
    Undiscounted implied value for project is US$2.85 bln which compares to our DCF value of US$4.37 bln (Anglo paying P/NAV of 0.65x) � (this is the most useful metric at this time given resource expansion potential) � market cap of NDM closed yesterday at US$1.4 bln
    � Validation of project by yet another major
    � Financing risk declines dramatically
    � Potentially easier project execution with two large players - Rio Tinto (~19.8% of NDM) and Anglo 50% of project

    Sell Ivanhoe (IVN-T: UNDERPERFORM target C$7.50) � NDM has the better project, superior deal with Anglo, more exploration news coming, 100% USD costs vs IVN which is fully exposed to rising Chinese currency

    Anglo will fund:
    Pre-feas US$125 mln (by end of 2008)
    Feasibility US$325 mln (by 2011)
    Construction US$975 mln (prod�n start 2015)
    We estimate capex for project of US$3.1 bln � at debt:equity of 70:30, project equity requirement is US$930 mln � therefore very unlikely that NDM would see further share dilution

    Unlike Rio Tinto who paid US$1.5 bln (in staged payments) for ultimately 33.35% and certain privileges for acquiring IVN shares in October 2006 (importantly not a direct position in the project) implying a value of US$4.5 bln for the company (incl at the time US$132 mln in cash, value for Monywa, Bakyrchick, Entr�e Gold, coal assets, Asian Gold, Jinshan Gold, Olympus Pacific) � IVN today trades at an outrageous US$5.5 bln and faces significantly more hurdles than NDM

    Oct 6/06 IVN shares were C$7.02 and then traded to ~C$12.00 after the announcement that Rio Tinto would invest in IVN shares

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NAK
0.76-0.020(-2.56%)Aug 29 4:00 PMEDT