Analysts Cut NovaGold and Teck Cominco Price Targets

Analysts moved to cut their price targets on both Teck Cominco Ltd. (TCK) and NovaGold Resources Inc. (NG) after the miners suspended construction at what was be a massive copper and gold mine at Galore Creek, British Columbia.

RBC Capital Markets analyst Stephen Walker shaved C$8 off his price target for NovaGold shares to C$13. He rates the stock a “sector perform.” It plunged more than 50% on Monday, closing at $9.25.

While the company may be able to pursue development alternatives such as a smaller scale project, Mr. Walker is ascribing no value to Galore Creek for now. Previously, it accounted for roughly 15%, or C$3.21 per share of RBC’s net asset value (NAV) of C$20.77 for NovaGold.

“The economics of the Galore Creek project are adversely affected by a stronger Canadian dollar, resulting in higher operating costs,” he said in a research note.

The analyst also revised upward his capital expenditure assumptions for NovaGold’s Donlin Creek joint venture with Barrick Gold Corp. His estimate climbs 15% to $3-billion, while the feasibility study pegged costs at roughly $2-billion. Mr. Walker’s revised NAV for Donlin is now C$10.20 per share, down from C$17.31.

Teck Cominco meanwhile, declined nearly 5% to end the day at C$35.67 on Monday.

UBS analyst Brian MacArthur, who rates Teck a “buy,” cut his price target to C$50 from C$54.50 per share. His NAV estimate fell to C$33.78 from C$34.65 in order to reflect a 50% discount on the value of Galore given its uncertainty.

Mr. MacArthur told clients he values Teck’s coal, base metal and gold operations at C$46.35, with an additional C$4.03 for its oil sands properties.

TCK vs. NG 1-yr chart: