Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


British Columbia Copper-Gold Miner Upgraded on Asset Sale News
Research Report

Share on Stocktwits


A CIBC report discussed the pros and cons of the transaction.

In a March 12 research note, CIBC analyst Oscar Cabrera reported that Imperial Metals Corp. (III:TSX) agreed to sell 70% of its flagship Red Chris mine in British Columbia to Newcrest Mining Ltd. (NCM:ASX) for US$806.5 million. On that news, CIBC upgraded its rating to Neutral from Underperformer and more than quadrupled its target price to CA$3.50 per share from CA$0.60 on Imperial. The asset stake sale is due to close in Q3/19.

Cabrera highlighted that with this transaction, Imperial avoids a liquidity problem. The company has $718 million in debt maturities coming due in Q1/19, but with the Red Chris deal closing in Q3/19, will not have to pay them until then. In addition, cash flow over the next two years from Imperial's other mines will likely be limited. They are Mount Polley, which is going on care and maintenance in Q3/19 until Q1/22, and Huckleberry, which is planned for a restart in 2020.

Also, longer term, Imperial's shareholders should benefit from Newcrest applying its expertise with the Cadia gold-copper mine in Australia to turning around Red Chris' current operations and developing its underground resource, Cabrera indicated. "We estimate Red Chris' current open-pit mine plan (i.e.), reserves, accounts for about 27% of total Measured and Indicated resources of 5,521 thousand tons of copper equivalent, with about 30% from an underground resource that remains open in various directions, according to Imperial Metals," he added.

The one downside of the deal, noted Cabrera, is that with it, most of Red Chris' resource upside potential gets transferred to Newcrest's shareholders.


1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from CIBC, Imperial Metals Corp., March 12, 2019

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers.
Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Imperial Metals Corporation (III)

· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Imperial Metals Corporation in the next 3 months.

Newcrest Mining Ltd. (NCM-AUS): CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months.

Want to read more about Gold and Base Metals investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe