Consolidated Thompson (CLM) – $7.79 – Announces US $100mm Bond Issue; Iron Ore Leverage Points to Further Upside

admin — Wed, 13 Jan 2010 18:38:28 +0000

Consolidated Thompson (CLM) – $7.79 – Announces US $100mm Bond Issue; Iron Ore Leverage Points to Further Upside
Outperform, Above Average Risk, Price Target: $7.00
CLM has entered into an agreement to issue US$100 million senior secured bonds to Marret Asset Management. The new debt financing effectively replaces an inferior US$75 million stand-by facility previously announced on May 12, 2009. CLM stated that the funds will be used for general corporate purposes, including the potential expansion at Bloom Lake. While this financing reduces CLM’s liquidity risk, it also hints at potential capex overruns. CLM’s iron ore leverage also points to further share price upside: based on forward curve iron ore prices, RBC CM states that its base case NAV per share would increase from $6.16 to $9.05. While the shares appear fully valued based on RBC CM’s current commodity price assumptions and base case NAV, they remain relatively attractive on 2011 P/CF and EV/EBITDA multiples. The company also provides investors the highest relative NAV leverage to iron ore amongst its peer group in RBC CM’s global coverage universe.

Consolidated Thompson (CLM) – $7.20 – Secures Credit Facility and Additional Offtake Agreement

admin — Thu, 07 Jan 2010 18:22:17 +0000

Outperform, Above Average Risk
CLM announced that it has entered into a US$50 million credit and offtake agreement with SK Networks (SKN), a subsidiary of the third-largest Korean conglomerate, SK Group. RBC CM views both the credit facility and offtake agreement as positive developments. The new credit facility has very reasonable terms, replaces an inferior undrawn credit facility that expired at the end of 2009, and based on its analysis ensures that CLM has sufficient liquidity over the near term. In addition to locking in future sales, the new offtake agreement suggests to RBC CM that management is confident in its ability to successfully ramp up production at Bloom Lake to 8 million tonnes of iron ore concentrate in the near term, setting the stage for a further expansion to 16 million tones per annum. RBC CM continues to believe that CLM provides a compelling iron ore growth story in the North American market.

TSX Commentary » Consolidated Thompson

Consolidated Thompson (CLM) – $7.79 – Announces US $100mm Bond Issue; Iron Ore Leverage Points to Further Upside

Consolidated Thompson (CLM) – $7.20 – Secures Credit Facility and Additional Offtake Agreement