Stop selling Ivanhoe Mines Ltd. (IVN) shares, said Raymond James analyst Tom Meyer. But don't buy them either, he added.
Mr. Meyer said in a note to clients:
Although we would not necessarily rush‐out and buy Ivanhoe shares at present levels, we do not believe it is wise to sell them either. We see much better value in Northern Dynasty Minerals Ltd. (NYSEMKT:NAK) [rated a "strong buy"] shares at this time.
The analyst said he increased his rating from "underperform" to "market perform" and reduced his target price from C$7.50 to C$4 to reflect existing market conditions.
He also lowered his net asset value per share estimate from C$14.63 to C$9.35, based on the assumption that Ivanhoe retains a 51% interest in the Oyu Tolgoi project in Mongolia, and that first year of commercial production is 2013. The NAV cut also reflects equity value markdowns of the stakes in Ivanhoe’s non‐core subsidiaries.
Mr. Meyer added that little has changed regarding the Oyu Tolgoi project in the past few months.
Mongolia has yet to approve its new Minerals Law, the company has yet to secure a suitable investment agreement, the scope of the project has yet to be formally announced, and the updated capital and cost numbers have yet to be universally disclosed.
Mr. Meyer's advice to investors had gone unheeded Tuesday. Ivanhoe stock was down 9% or C$0.34 to C$3.12 at noon ET on Tuesday.