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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (147252)	2/19/2009 8:45:53 AM
From: kidl	Respond to of 313059

Canaccord on SST - Feb 18: Metals and Mining -- Exploration and Development NEW HIGH-GRADE ZONE DISCOVERED AT MINTO; TARGET INCREASE ON HIGHER PRECIOUS METAL PRICES AND ACQUISITION POTENTIAL Event Capstone Mining (CS : TSX : C$1.26 \| Not Rated) reported the discovery of a new high-grade zone at the Minto Mine, the Minto North Zone. Silverstone has a royalty stream on 100% of the life of mine silver and gold produced from the Minto Mine. Impact: Positive The Minto North Zone is one of five high-grade zones that have been identified at the Minto mine. Any mine life extension and/or increase in production resulting from development of these zones is a net benefit to Silverstone, with no associated capital obligations. An updated resource estimate for the Minto mine is expected in late-Q1/09. Valuation We have revised our near-term gold and silver price forecasts upwards to reflect the strong precious metals environment. The net impact of these pricing revisions is a slight increase in our estimate of NAVPS (5%) to C$2.34, up from C$2.30 per share previously. We have also adjusted our peak gold price forecast to US$1100 per ounce, up from US$950/oz previously. Based on our revised peak gold pricing scenario, our target NAVPS has increased to C$2.52, up from C$2.40. M&A activity in the mining sector has increased and a slew of equity offerings have bolstered the balance sheets of larger-cap mining companies. Silverstone is the most inexpensive precious metal royalty company in our coverage universe. Therefore, we believe that an acquisition bid on the company is likely. To account for a potential acquisition bid, we are increasing our target multiple to 1.0x NAV, up from 0.8x previously. This gives us a new target price of C$2.50 per share, up from C$2.00 per share. We maintain our SPECULATIVE BUY recommendation on the shares of Silverstone.