Event: BMO Research is initiating coverage of Brigus Gold (BRD.TSX) with a Market Perform rating and a C$1.15 target price. BRD is an emerging junior gold producer that provides investors production growth of ~56% over the next three years, based on BMO Research forecasts. BRD has one producing asset, the Black Fox gold mine located in Timmins, Ontario.
Impact: Brigus has had a short, but fairly difficult corporate history with the last couple of years centred around development of the Black Fox mine and removing a hedge book. This has resulted in a relatively low valuation, despite what has been a fairly remarkable turnaround in a short amount of time. Forecasts: BMO Research forecasts 2012 saleable production of 74koz gold at cash costs of US$878/oz gold. BMO Research estimates 2012 and 2013 EPS of US$0.10 and US$0.30 and 2012 and 2013 CFPS of US$0.24 and US$0.43, respectively.
Valuation: BRD trades at 1.1x the 10% nominal corporate NPV of US$0.86/sh using BMO Research metal price forecasts and 0.8x the 10% nominal corporate NPV of US$1.11/sh at a spot price of US$1,670/oz gold.
Recommendation: BRD is rated Market Perform with a C$1.15 target price. The C$1.15 target price represents 1x the 10% nominal NPV using the spot gold price. BRD trades at a premium to peers on a P/NPV basis, but at a discount on a P/E and P/CFPS basis. A separate report entitled “All Your Eggs in One Basket” provides a more detailed analysis of the company.
For full report including research disclosures: http://research-ca.bmocapitalmarkets.com/documents/e1735732-b206-4984-af55-494fcb4fa72f.pdf