Will Private Placement Woes Sink Anvil Mining?

The deteriorating market conditions are taking a big toll on Anvil Mining Ltd. (AVMNF.PK), as the company was forced to put off a C$237.3-million private placement from Israeli investor Dan Gertler, on Monday.

However, Raymond James analyst Tom Meyer does not think this is the end of the world for Anvil. He noted that with approximately $200-million on its balance sheet, the company has enough flexibility in the near-term to seek out other sources of funding for its production expansion program in the Democratic Republic of Congo. The company is also debt-free.

He wrote:

Based on our analysis, only by assuming the unlikely price of $2.50/lb copper from today onwards would the company face a worrying but 'small' cash shortage of approximately $20-million sometime in [the third quarter of 2009], assuming the company does not deviate from its previously announced plans.

Mr. Meyer rates the stock a "strong buy" with a target of C$17.00 a share, more than triple the current level.

Paradigm Capital analysts Dave Davidson and Jacob Willoughby wrote that the cancellation of the private placement should push back completion dates at Anvil's Mutoshi and Kinsevere projects. However, they wtill maintained a "buy" rating on the stock and an even higher price target of C$19.00 a share.

Comments

[Michael N. ...:]

You should consider a stock loan. There is no need for a time consuming and costly registration and stock loans do not cause further dulition to existing shareholder.

Feb 15 06:47 PM