The Globe and Mail reports in its Saturday, April 4, edition that Scotia Capital analyst Orest Wowkodaw lowered Capstone Mining to "sector perform" from "sector outperform" with a 70-cent share target, down from $1. The Globe's David Leeder writes in the Eye On Equities column that analysts on average target the shares at $1.10.
Mr. Wowkodaw says in a note: "We are lowering our investment rating on Capstone Mining based on heightened risks associated with the currently very depressed Cu price environment and new emerging operating risks in Mexico. With Cu prices currently wallowing in the $2-$2.25/lb range due to the escalating COVID-19 crisis, the company's flagship mine, Pinto Valley, is likely to burn material FCF [free cash flow] in the current environment. ... While the situation remains fluid, many mines in Mexico appear to be temporarily closing for 30 days to comply with a government-issued quarantine protocol related to COVID-19. Although Cozamin represents only 20 per cent of our asset level 8-per-cent NAVPS [net asset value per share] for the company, it is a low-cost asset, and a potential shutdown would be a meaningful blow to the company, particularly if extended beyond 30 days."
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