EMED Miningwww.emed-mining.com TICKER: EMED EXCHANGE: L
EMED Mining is focused on the exploration and production of copper, gold and tungsten, in Europe and the Middle East. EMED makes use of previous mining locations to utilize under-explored resources, as well as developing new start-up ventures. The company is currently focused on two major projects in Spain and Slovakia; the Rio Tinto Copper Mine and the DETVA Gold Project respectively. EMED Mining is also a 19% shareholder in KEFI Minerals plc - a gold exploration company concentrated upon Turkey and Saudi Arabia.
EMED Mining's principal activity is the acquisition or discovery and then production of metals, with a focus on copper and gold. Its region of interest spans Europe and the Middle East. The company owns 100percent of the historic Rio Tinto copper mine and plant in Spain, and plans to restart production there in 2013.
Today's announcement of a Sale and Purchase Agreement with Rumbo 5-Cero, S.L. removes one of the few remaining obstacles to the realisation of the Projecto Rio Tinto.
The Company has also announced that major shareholder and cornerstone customer Yanggu Xiangguang Copper Co. Ltd has conditionally agreed to subscribe for 32.25 million new ordinary shares at a price of 10 pence per share for aggregate proceeds of USD5 million.
On our estimates, EMED is trading on prospective earnings multiples in low single figures. Our longer term fair value price target is 49p per share.
EMED Mining's principal activity is the acquisition or discovery and then production of metals, with a focus on copper, gold and, more recently, tungsten
The lengthy permitting process for the Rio Tinto mine is near its end as the company has now submitted documents as requested by the Junta and Departments of Industry and Environment
EMED expects commissioning to start by end 2012, with ramp-up to 9m tonnes pa by mid 2013
We confirm our target prices of 41p (medium term) and 55p (longer term) against the current share price of 9.1p
EMED has received approval from the Department of Culture and Heritage of the Junta de Andalucia (the regional government) for its plans to restart the Rio Tinto mine. This is the first such approval expected to follow from the announcement by the Junta in March that it recognises EMED‟s legal claim to the project‟s mineral rights. We expect remaining approvals to continue to be expedited and EMED to hit its target for first production in 2012.
Copper has now traded at more than $4.00/lb for about four months. EMED is a prime near term production play on the Cu price. Our estimates are influenced by the assumption that EMED will lock in current high Cu prices by forward selling of a proportion of production.
Our medium term target price of 41p is founded on a base case of 9m tonnes pa of ore treated, while our longer term target of 55p assumes a move to 15m tonnes pa (both within the current resource pit). We do not factor in the substantial expansion of reserves and resources to be expected from drilling in known mineralised areas outside the current resource pit at Cerro Colorado, or in historic underground mines on the Rio Tinto property. Currently the shares trade at 16p.
Dual listing in Canada should raise awareness; up to Can$ 35m being sought
Value underpinned by strong copper price
Revised share targets: 36p medium term, 48p long term - versus current 9p
Shortly to be listed on TSX as well as AIM, highlighting value disparity
On track for restart of Rio Tinto mine in 2011; benefitting from € costs and $ sales
Medium target per share 40p and longer term 56p - versus current 8p level
Re-evaluation of potential pushes longer term value to 54p / share
High probability that the Rio Tinto permitting process will complete successfully
Drilling can establish further resources; copper price holding up; US$ appreciation vs. € is a positive
Progress in permitting for Rio Tinto mine: geotechnical drilling; mandates for rehabilitation, systems and plans
Copper trading favourably at $3/lb; gold hits new levels at $1183/oz
Fair value per share maintained at 35p versus current 11.5p level
Close to triggering restart of Rio Tinto mine (940,000 tonnes of copper - resource base)
Evaluating release of value in Slovakian gold discovery
Strong 2009 recovery in copper price not yet reflected in share price
The EMED share price has reflected this fall, down from 17.25p to the present 4.5p. Clearly, the market is signalling doubts about the activation of the Rio Tinto copper project ('Rio Tinto'). Previous fair value calculations published by us appear to be of academic interest at the moment.
However, the 2008 Q4 report just released by the company serves to counter the generally prevailing mood of pessimism. In an exercise of battening down the hatches, EMED has cut outgoings by more than 50%, renegotiated the terms for the acquisition of the Rio Tinto mine , and has outlined plans for a further capital injection . Staffing has been cut by more than 60%, and senior management personnel have embraced substantial salary cuts.
Dilution-affected fair value reduced from 70p to 65p
Fair value still more than double share price with copper at $2.2/lb