12.01
In our view, Sojitz is paying fair value for the Gibraltar stake, valuing it at
roughly $720MM. This transaction is a positive step for TKO and if the
transaction closes as announced it is accretive to our NAV per share as it
will replace most of our equity financing assumption to build Prosperity.
This transaction places the company in a solid position to contribute the
equity portion of the ~$800MM needed to build Prosperity. Should the
company be able to obtain more traditional project finance, according to our
projections, only minimal further dilution would be required for Prosperity.
We view this as a definite sign that management is confident in its ability to
get Prosperity through the environmental permitting process. We expect to
hear the Province’s decision in January regarding the environmental
permitting.
Should the transaction close as announced, it will lower our equity and debt
financing assumptions. The net result is our price target moving from $4.00
to $5.50; however, this valuation is based on the speculative outcome that
Prosperity is granted EA approval and the Sojitz deal closing as stated
No Comment.
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