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gold mining production mineral precious metal glowing pour
gold mining production mineral precious metal glowing pour

Eye on Equities

Detour Gold poised to deliver Add to ...

Detour Gold Corp.'s eponymous mine will be built on time and on budget and will become Canada's largest single-sourced gold mine ever constructed, CIBC analyst Barry Cooper said.

"We think that over 20 million ounces will come out of the open pit, with production approaching one million ounces annually," he wrote in a research report. Investors should prepare for a 50 per cent increase in throughput

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Upside: At the current gold price , Detour Gold can provide cash flow of about $7 a share, Mr. Cooper said. Cash flow would change about 75 cents a share for every $100 move in the price of bullion, providing a solid base and good future leverage, and making the company an attractive takeover target. He rates the stock "outperform," with a $44 price target.

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Bear Creek Mining Corp. shares will likely be weak after Peru's decision to revoke the miner's title over the Santa Ana concessions, Raymond James analyst Brad Humphrey said.

The stock's current price reflects the removal of Santa Ana, and "the discount applied to the southern part of Peru has increased, impacting the more material Corani project," said Mr. Humphrey, who acknowledged that he was surprised by the government's decision.

Downside: Mr. Humphrey cut his target price 40 per cent to $7.80 from $13.50 and his rating to "market perform" from "outperform."

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Sandvine Corp. is lagging its peer group due to limited profitability, and a recent selloff provides a potential entry point into the stock, National Bank Financial analyst Kris Thompson said.

The telecom software maker is gaining traction as well as market share and will benefit from investor interest in the sector, Mr. Thompson wrote.

Upside: "We like the risk here now," he said. Mr. Thompson expects that Sandvine can take advantage of a positive environment to bring about profitable revenue growth. He rates the stock "outperform" and has a $2.50 price target.

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Dollarama Inc. will benefit from Wal-Mart Canada's decision to acquire up to 39 Zellers' store leases from Target Corp., Desjardins Securities analyst Keith Howlett said.

"Dollarama, which prefers to locate next to a Wal-Mart store, is a potential beneficiary of more Wal-Mart locations," Mr. Howlett wrote. Discount food stores located in the same mall may also gain from Wal-Mart replacing Zellers as mall traffic increases.

Sears Canada is likely to come under the greatest pressure from Target's entry and the expansion of Wal-Mart Canada, he said.

Upside: Mr. Howlett has a $40 target price on Dollarama.

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The board of Central Vermont Public Service is likely to support Fortis Inc.'s takeover bid, despite a higher competing offer from Gaz Metro, RBC Capital Markets analyst Robert Kwan said.

Both offers are fair, Mr. Kwan pointed out, but the utility's board may be swayed in Fortis' favour by the $17.5-million (U.S.) break fee and up to $2-million expense reimbursement that may be payable to Fortis. He does not expect a bidding war.

Upside: Mr. Kwan has a $34 (Canadian) price target for Fortis, reflecting the low interest-rate environment and good growth from its core Canadian regulated utilities.

 

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