Jacob Securities Research
Petaquilla Minerals Ltd. (TSX:PTQ) – Initiating Coverage: Emerging Gold
Producer In Panama, Well Positioned for Growth
Event: We are intiating coverage of Petaquilla Minerals Ltd. (PTQ) with a BUY
rating and a 12-month target price of $1.75.
Investment Thesis:
Petaquilla Minerals Ltd. (PTQ) is an emerging gold producer, the first in
Panama. We believe PTQ will benefit from first-mover advantages to lower the
risk to effectively achieve a growing resource base and rising production
profile in the safe mining jurisdiction of Panama. The recent Iberian Resources
Corp. acquisition further mitigates geopolitical risk and provides project
diversification. With the many initiatives currently under way at PTQ, we
believe a re-rating is probable and valuation is compelling at these levels.
Near-Term Catalysts:
Before March 31, 2012 PTQ intends to circulate a proxy circular, containing
comprehensive details of the Panamanian Development and Infrastructure Ltd.
(PDI) spin-out to shareholders, including detailed financial and operating
information. Once this proxy is released, we will incorporate PDI into our
valuation. We believe there is a material amount of value that can be realized
at PDI, which will provide significant upside to our valuation.
PTQ plans to complete 12,000 metres of drilling by the end of FY12 at the
surrounding deposits to Molejon and plans to upgrade 300Koz of inferred gold
resources to measured and indicated (M&I) category, and 357Koz of M&I resources
to proven and probable (P&P) reserves, a 44% increase to current reserves, which
could extend the mine life at Molejon and provide additional feed to the
processing plant.
Recommendation:
Our 12-month target price of $1.75 is based on a 50/50 weighting of 7.5x our
2012 CFPS estimate of $0.27 and 1.0x our NAV estimate of $1.46/share using a 5%
base-case discount rate. We are initiating coverage on Petaquilla Minerals
with a BUY rating.
Research Contact:
Edward J. Yew, MBA, P.Eng, Analyst
eyew@jacobsecurities.com
+1 (416)866-8356
Provider ID: 00000366
-0- Jan/20/2012 21:03 GMT
