Colossus Minerals Inc. (COLUF)

[gsfl]

Nicholas Campbell, Canaccord Adams (10/13/10)
"The Serra Pelada project possesses uniquely high-grade gold/PGM mineralization; it is on track to begin production in 2012 and recent exploration has demonstrated the potential to expand the resource. For these reasons, we view Colossus Minerals as a likely takeover target. We maintain our SPECULATIVE BUY recommendation on the shares of Colossus Minerals with a target price of CAD$11.60 per share, up from CAD$11.00 previously.

In our analysis of Colossus Minerals, we value the Serra Pelada project based on 7.5% discounted cash-flow valuation with an additional value of US$100/oz. ascribed to a potential 1 Moz. resource to account for exploration upside potential. We continue to value the shares of Colossus Minerals based on a 1.0x multiple to our peak gold price estimate of NAVPS (7.5%, US$1,500/oz. Au) of CAD$11.56, up from CAD$10.79 previously."