Tuesday, March 04, 2003 3:30:44 PM
http://www.gabrielresources.com/i/pdf/hsbc-feb272003.pdf
see pages 7 and 8
The company currently has approximately USD30m in working capital, while the budget for this year envisions capital expenses of USD65m. Moreover, the company will need to complete its equity contribution to the project in order to be able to complete the project finance package.
Based on the BES and assuming additional dilution, we estimate an NPV of USD1.75/sh, or approximately CAD2.47/sh, based on a gold price of USD300/oz. Based on a USD350/oz gold price, the NPV per share improves to USD2.82. We believe that the company will now find it more difficult to fund the development of Rosia Montana. Although the returns are robust—particularly in light of the improved gold price—the company will have to raise at
least USD100m in equity in order to access some USD300m of project financing. One must not forget, however, that a large-scale, and relatively low-cost, undeveloped asset like Rosia
Montana will continue to be attractive to the industry’s largest producers. We are lowering our target for Gabriel Resources to CAD3.50/sh (from CAD6.00/sh) and changing our recommendation to Reduce (from Buy).
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