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2014-04-07

Potential in Sotkamo Silver

Detta är en betald analys på uppdrag av Sotkamo Silver utförd av analysföretaget Jarl Securities på uppdrag av Analysguiden.

Sotkamo Silver is a junior mining company aiming at opening a silver mine in eastern Finland. Our DCF-valuation shows upside potential for the share and we recommend subscribing to the new share issue.

Sotkamo Silver is a junior mining company which intends to exploit mineral deposits in the Nordic countries and was created in its current form in March 2010. The share is listed on NGM Equity and NASDAQ OMX Helsinki as well as traded on Börse Berlin, OpenMarket, Germany.

The company’s main project is the Silver Mine in the municipality of Sotkamo in eastern Finland. The silver deposit was discovered in 1980 but no mining has been done due to low silver prices in the late 80ths/early 90ths. The mining concessions were acquired by Sotkamo Silver in 2010 and since then, the company has invested in dewatering and ventilation as well as power lines and resource estimates. In March 2014, the latest Bankable Feasibility Study (BFS) was presented and it showed an expected life of the mine of 8 years. It also showed a positive NPV (before taxes) calculated with 8 % interest if the silver price remains above USD 15/oz during the project period, which is expected to start in 2015/2016.

Between March 31 and April 14, Sotkamo Silver is raising MSEK 42.5 in a new share issue at the price of SEK 6 (EUR 0.68). Our DCF-valuation indicates a target price of SEK 11 (EUR 1.22) given the base case estimates from the BFS after the share issue. This creates an upside potential for Sotkamo Silver compared to both the new share issue price and current share price. Our recommendation is to subscribe to the share issue and to buy after the share issue.

 

Källa: Jarl Securities

Författare Jarl Securities

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