The Globe and Mail reports in its Thursday edition that in the wake of the $806.5-million (U.S.) sale of a 70-per-cent interest in its flagship Red Chris mine to Newcrest Mining, CIBC analyst Oscar Cabrera raised his rating for Imperial Metals ($3.45) to "neutral" from "underperformer." The Globe's David Leeder writes that Mr. Cabrera says in a note: "Once concluded, the transaction should eliminate III's liquidity issues. However, it transferred most of RC's mineral resource upside potential to NCM shareholders. In addition, we see limited upside in III's cash flow generation from its Mount Polley (care and maintenance) and Huckleberry (restarting in 2020) mines over the next two years. Importantly, the transaction is to close in Q3/19, requiring III to postpone payment to creditors until then ($718-million in debt maturities in Q1/19)."
Mr. Cabrera raised his share target to $3.50 from 60 cents. Analysts on average target the shares at $3.20. Mr. Cabrera adds: "III shares rerated after liquidity concerns were lifted with the RC transaction announcement. In our view, the EV/EBITDA and P/NAV gaps should close with improved execution at RC and improvements/additions to the deposit mine plan, respectively."
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