Analysts Give Anvil's Private Placement a Thumbs Up

Anvil Mining Ltd's (AVMNF.PK) announced private placement worth C$297.5-million is being viewed with positivity by two analysts who cover the copper miner operating in the Democratic Republic of Congo.

On Thursday, Anvil said that Catala Global Limited would purchase almost 23.8 million shares in the company at C$12.50 per share Catala, which is owned by a trust for the benefit of family members of well known diamond investor Dan Gertler, will own about 25% of Anvil after the transaction and elect one person to the board. If approved by shareholders, Anvil will use the proceeds of the placement to help complete work at its open pit mine in Kinsevere near the city of Lubumbashi and its Kulu mine near Kolwezi.

In a research note, RBC Capital Markets analyst Cailey Barker wrote:

We believe that having an influential, well-connected shareholder [in Gertler] will help smooth over the ongoing mining licence review, improve in-country relations and may provide a means for M&A activity.

The transaction would have a dilutive impact on our NAV, offset by the expansion at Kulu. The net result reduces our net asset value to $14.67 per share, down from C$15.77 per share.

The analyst has an "outperform" rating and C$16 price target.

Meanwhile, Raymond James analyst Tom Meyer, reduced his Anvil target price from C$22 to C$19 because of the dilution, but continues to recommend clients buy Anvil shares.

In a note, he said:

We strongly believe Mr. Gertler’s support for Anvil is a material vote of confidence in the company’s project pipeline, political risk profile of the DR Congo and the strong management and technical team.