Inmet Mining (IMN-T) shares surged $3.12 apiece, or 4.76%, to close at $68.62 in the new year after the company announced that the Panamanian government has approved an environmental and social impact assessment for its Cobre Panama copper project – including mining operations and related infrastructure, a port and a coal-fired power plant.
Korea Panama Mining has until mid-January to acquire a 20% stake in the project for a US$155-million investment. KPMC is a joint venture between Korea Resources Corp. and LS-Nikko Copper.
Matt Murphy of UBS Investment Research has a “buy” rating on the stock and a 12-month target price of $70 per share. He notes that the environmental and social impact assessment (ESIA) was the “key step for permitting of the project,” and believes that while further permitting is required before construction can begin, “many of these permits have already been prepared for submission and were contingent on ESIA approval.” He also reasons that the ESIA approval “will add further impetus to partnership and financing discussions.”
Tom Meyer, a mining analyst at Scotia Capital in Toronto, expects KPMC will exercise its option and has a one-year target price on Inmet of $100 per share.
According to a daily newsletter from Canaccord Wealth Management, a division of Canaccord Genuity, Inmet remains one of the top picks for the firm’s base-metal analyst Orest Wowkodaw, while it is “currently trading at a 2012E and 2013E enterprise value to EBITDA of 4.8 times and 3.5 times, and at a 30.6% discount to an 8% net present value, which compares with a mid-cap base metal producer coverage universe average of 6.2 times, 4.6 times and at a 39.6% discount to net present value.”
Cobre Panama is a large, open-pit copper development project located 120 km west of Panama City and 20 km from the Caribbean Sea coast in the district of Donoso in Colon province. The concession is made up of four zones totalling 136 sq. km.
The project area is accessible by the Pan-American highway system from Panama City to Penonome, surfaced all-weather roads to Llano Grande and gravel roads through the town of Coclecito.
The topography is low elevation at less than 300 metres, but rugged with considerable local relief covered by dense rainforest. The climate is tropical with high rainfall and humidity.
The ESIA was submitted to Panamanian authorities in September 2010.
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