According to Canaccord Genuity:
Q4/12 FINANCIALS; HIGHER 2013 CAPEX GUIDANCE, AND LOWER 2013 OPERATING GUIDANCE
TCM released a Q4/12 EPS loss of (US$2.87), including a large writedown at Endako. We calculate an adjusted EPS of US$0.00. Consensus was a loss of (US$0.06), range (US$0.16) to +US$0.03. We were forecasting a loss of (US$0.15). TCM decreased 2013 production guidance by 6%, and increased 2013 cash cost guidance by 4%. 2013 capex guidance increased from US$295-335 million to US$440-480 million, implying Mount Milligan capex at the upper end of the previous guidance range.
We believe that TCM should be able to commission Mount Milligan without recourse to additional funds. We are assuming start-up during Q4/13, and full production by Q2/14. On this basis, we are forecasting TCM’s cash balance to trough at US$190 million at end-2013
Action and valuation
We are maintaining our HOLD recommendation, but decreasing our 12-month target price to C$3.50, (from C$3.90), based on the average of: i) an unchanged 4x 2014E EV/EBITDA, which would imply a share price of C$3.91, and ii) our NPV10 estimate of C$3.05.
Next potential catalyst and investment risks
We are forecasting Q1/13 adjusted EPS of +US$0.03, based on sales of 6.3 million lbs, at an average realised price of US$12.11/lb, and a cash cost of US$7.07/lb.