Northern Dynasty: Price Target Soars on Growing Takeover Potential

TD Newcrest analyst Craig Miller thinks Northern Dynasty Minerals Ltd. (NAK) is a growing takeover target after announcing last week that the Pebble Limited Partnership, a joint venture between Northern Dynasty and Anglo American plc (AAUK), has approved a $59-million budget to advance the Pebble project in Alaska.

He said in a recent note to clients:

We believe Pebble is one of the largest and economically viable copper-gold projects in the world in which a junior company has a significant interest.

We are increasing our target price to C$18.75 from C$5, and increasing our rating to Speculative BUY from HOLD on our increasing conviction that Northern Dynasty could be taken over within the next 12 months by either a copper company or a gold company."

Shares in Northern Dynasty have risen 3.3% since the new work program budget was announced on Mar. 19.

Mr. Miller said his new price target based on the Anglo American valuation of $1.425-billion in expenditures for its 50% interest.

This valuation, on a total cost per recoverable pound basis, translates into a value of $18.73 per NDM share, or a total cost of about $0.22/lb of recoverable copper in our DCF model.

He added that his total cost valuation is significantly below comparable valuations for some recent transactions including Invecture Group's acquisition of the Frontera Copper Corp. (FRCPF.PK) transaction at 1.40 per recoverable pound and the $1.48 cost of Quadra Mining Ltd.'s (QADMF.PK) transaction of Centenario Copper Corp.

Comments

[Doc 224899:]

There seems to be a heck of a lot of political push back against developing Pebble, based on a quick review of the recent news.

Mar 25 11:35 AM

[Candor7:]

The State of Alaska historically has never refused a viable application for a mining permit. And Sarah Palin is very much in charge.

Mar 28 10:01 AM