Proactive Investor's  Instablog

Proactive Investor
Send Message
Proactiveinvestors is a leading multimedia news organization, investor portal and events management business with offices in New York, Sydney, Toronto and London. Proactiveinvestors operates five financial websites in four languages providing breaking news, comment and analysis on hundreds of... More
My company:
My blog:
  • Exeter Resource Rated A "Sell" By Mine2Capital With $1.75 Price Target 1 comment
    Aug 13, 2012 11:23 AM

    Exeter Resource Corp. (TSE:XRC) was the subject of a new research report from Mine2Capital, which issued a "Sell" recommendation and a $1.75 target price.

    Exeter Resource Corp. is a Canadian public company whose focus is to maximize shareholder value through the discovery, evaluation and development of gold projects in the Maricunga district in Chile.

    The junior explorer's flagship asset is the 100 per cent-owned Caspiche Project which is a gold-copper porphyry system, an orebody common to many of the world's largest open pit gold-copper mines.

    Caspiche is located in the prolific Maricunga mineral belt which is currently undergoing massive expansion and investment in mineral projects from some of the worlds' largest gold miners.

    A January 2012 pre-feasibility study (NYSE:PFS) showed robust economics and strong leverage to gold prices. The PFS estimates pre-tax NPV of US$2.8 billion at a 5 per cent discount rate, with average cash operating costs of US$606 per gold equivalent ounce (before copper and silver credits) and US$18 per gold equivalent ounce (after copper and silver credits).

    Total production over a 19-year mine-life was pegged at 12.98 million ounces of gold, 4 billion pounds of copper and 14.7 million ounces of silver.

    In a research note, Mine2Capital's mining analyst Alka Singh outlined that Caspiche was strategically located in the prolific Maricunga Mineral Belt in Chile, the longest standing democracy in the Latin America region.

    The proximity to multi-million ounce gold deposits in the Maricunga Belt also creates an opportunity for shared infrastructure. Caspiche is located between Barrick (TSE:ABX)(NYSE:ABX) and

    Kinross Gold

    's (TSE:K)(NYSE:KGC) Cerro Casale gold-copper deposit 10 kilometres to the south and Kinross's Maricunga Mine 15 kilometres to the north.

    Andina Minerals' (


    ) Volcan gold deposit lies 35 kilometres north northeast of Caspiche.

    Exeter also has a strong management with expertise in gold-copper exploration with geologists Yale Simpson and Bryce Roxburgh with over 30 years of mining experience.

    In terms of risks, the Mine2Capital report highlighted that scarcity of water was an issue in the area. However, Exeter has entered into an option agreement with a private company to purchase water rights for 300 litres per second, located about 150 km to the north of the project.

    Also, Barrick made a recent decision to shelve its Cerro Casale project in Chile, which lies 10 km south of Caspiche and hosts a similar-sized deposit and grades.

    "We believe the US$4.8 billion estimated capex for Caspiche will also experience cost over-runs," Mine2Capital's Singh said.

    Singh also wrote that Exeter has yet to provide a feasibility study, secure financing and construct the mine.

    "New mines often face commissioning issues, which need to be addressed."

    Exeter will also require additional funds for exploration and development of its flagship project and other exploration-stage assets. As of March 2012, Exeter C$68 million in cash, sufficient for its 2012 planned exploration and other operations.

    "However, the company may have to raise additional funds of over US$300 million (for the heap leached oxide-only ore) or over US$5 billion for developing the Caspiche super-pit option," the Mine2Capital analyst said.

    Although politically stable, Chile however is not completely geologically stable and lies in a seismically active zone.

    As for near-term catalysts, investors can expect to see additional drill results from regional targets, a pre-feasibility study of the heap leach project next year with production at Caspiche in early 2016.

Back To Proactive Investor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • wildstylechef
    , contributor
    Comments (4) | Send Message
    I am really tiring of this lack of research and thought that has been going into the commentary of Exeter.
    1) Exeter was never EVER going to put this mine into production, so coming up with the improbability of them being unable to do so is like telling a man he cannot fly. Exeter is and always will be and exploration company until it makes a big sale on a find like this and either outrightly sells it or goes in with a financier.
    2) Barack and there problems has NOTHING to do with other large finds and the idea that since they are not going to produce any more large CAPEX projects that they are not feasible. The reason the Barack cannot do any more large projects is because they have no more cash, They blew their budget. They are cash starved. They are cash negative.
    3) And since when are there only 2 or 3 companies capable of buying such a property as Exeter and who is to say that anyone who buys Exeter has to have the cash to bring it into production??
    Hell the property presently in metals value is worth 63 billion dollars and if gold hits 2000 it hits 77 billion and right now the market cap is 144 million geeeeeze
    14 Aug 2012, 07:11 AM Reply Like
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.