Thursday, April 19, 2012
Great Western Minerals Update: Three Buys Can't Be Wrong.
This week I have been ‘inundated’ with comments in response to my post The Rare Earth Sale of the Year: Buy Now! from RareMetalBlog readers requesting more air time for Great Western Minerals Group Ltd. (TSXV: GWG). Inspired, we coordinated an interview with them early next week. To prepare, we went through the most recent analyst reports covering Great Western Minerals, and here are some highlights of GWG, that closed at CDN$0.46 today.
Cormark Securities Inc. (Edward Otto) – March 19, 2012:
•Buy Recommendation: target price of $1.50
•Continues to view Great Western Minerals as an advanced rare earth developers with the potential for production to begin in the second half of 2013 and 5,000 tonnes per annum of separated rare earths production capacity from the Steenkampskraal mine.
•The Less Common Metals downstream rare earth alloying business provides a long operating history and a rare earths sales network that will benefit from a secure supply of production from Steenkampskraal.
•Less Common Metals was acquired in 2008 and serves some of the world’s largest magnet manufacturers many of whom then supply the world’s largest car manufactures.
Euro Pacific Canada (Nick Agostino) – March 20, 2012:
•Strong Buy Recommendation: target price $1.40
•Great Western Minerals’ operations have all the necessary attributes to be a successful project and investment with low operating costs, low capital expenditures, a seasoned management team, excellent surrounding infrastructure controlled radio activity and high rare earth oxides grades with a skew towards permanent magnet rare earths.
•By their analyst’s estimates, Great Western Minerals has $75 million in capital expenditures remaining over the next 12-months, including further expansion at its Less Common Metals facility. Great Western Minerals also has about $110 million in net funds available post convertible bond financing. This surplus of $35 million can serve as a backstop in the event that the GQD $30 million separation facility runs over budget.
The Strategist Newsletter (Jon Christian Evensen) – April 12, 2012:
•Buy Recommendation: target price of CDN$1.05
•The GQD joint venture separation facility is a ringing endorsement that the NI 43-101 resource estimate on Steenkampskraal will be positive when published later this spring.
•Aside from Less Common Metals and Molycorp Tolleson the analyst has not found a neodymium-iron-boron (NdFB) alloy production facility outside of China or Japan not controlled by Japanese or Chinese interests.
•Regardless of what happens at Steenkampskraal, Great Western Minerals is worth more than twice its current market capitalization purely based on the cash flow potential of its Less Common Metals facility operating on an expanded basis from 2015 onwards.
