Canaccord precious metals analyst Kevin MacKenzie upgraded their 12-month price target on Bear Creek Mining (TSXV: BCM) to C$6.00 from C$3.75 this morning, reiterating their speculative buy on the stock. This comes after a management update that clarifies the timeline for their U$600 million project financing.
Bear Creek Mining’s star asset is a 100% owned Corani Silver project located in Peru. The company recently issued an updated feasibility study, which shows the average silver production being 9.6 million ounces over 15 years and an all-in sustaining cost of US$4.55/ounce of silver. In the management update, Bear Creek touches on a few things, including project financing, development timeline, and early works program.
Bear Creek said that the financing discussions are in advanced talks with multiple debt providers and expect to close a financing package in the fourth quarter of 2020. The capital expenditure is estimated to be at US$600 million. Of that, US$400 million is single-digit rate debt, and the rest consists of an off take agreement plus some equity financing.
Canaccord analyst Kevin MacKenzie notes that the construction will not start until early 2021, even if/when the financing closes in the fourth quarter of 2020. Still, Bear Creek has made many hires to the construction team, and analysts expect the hires to be rounded out as the project gets closer to construction.
Canaccord also states that three potential short term catalysts will help this stock get or exceed their 12-month price target. The catalysts consist of a further extension of the silver bull market, closing the project financing in the fourth quarter of 2020 and then the start of the onsite construction in the first half of 2021.
Earlier this week Cantor Fitzgerald initiated Bear Creek Mining with a Buy rating and a C$5.70 12-month price target, saying that Bear Creek’s Corani Project is “one of the largest undeveloped silver projects in the Americas.” They also state that Bear Creek is well-positioned to get the financing they need for the project while still offering good value and “excellent leverage” to the rising silver price.
Cantor highlights a few different investment qualities of Bear Creek, such as the project being “shovel-ready” with all major environmental and construction permits in hand. Management consists of experienced mine builders with a proven track record, and all they need to get is the financing to start. As per Cantor, it offers excellent leverage to the rising silver price. Cantors analyst Matthew O’Keefe says that with every 10% move in silver, the net asset value per share goes up by 13.5%.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.