Dahlman Rose & Co. Lowers Price Target on Thompson Creek Metals (TC)

Dahlman Rose & Co. just issued a research report, where it lowers its price target on shares of Thompson Creek Metals Co. Inc. TC from $18.00 to $13.50; it also reiterated its Buy rating on the stock. The Dahlman Rose analysts said, “Thompson Creek Metals Company is acquiring Terrane Metals Company for a total consideration of C$650 million made up of C$0.90 in cash per Terrane share and 0.052 TC shares per Terrane share. Thompson Creek has also entered into a separate transaction with Royal Gold, where Royal Gold will pay $311.5 million to Thompson Creek for the right to purchase 25% of the gold stream from Mt. Milligan project.” They added, “When the Mt. Milligan project is complete in 2013, the company will offer gold, copper, and molybdenum and will be viewed as a mid-tier base metal company, instead of a pure play molybdenum company. Further, the company will have a robust project development pipeline in addition to the two projects, Endako and Mt. Milligan, which are currently under construction.” The DR analysts closed by saying, “Based upon the near-term dilutive nature of the deal, we are lowering our price target for Thompson Creek to $13.50 per share from $18. Over the long-term, we would view this as an accretive and transformative transaction for the company. We like the company's new diversified product offering and believe that investors will be attracted to and willing to pay a higher multiple for a gold, copper, and molybdenum company. We reiterate our Buy rating on the shares. We derive our price target by applying a 5.5 EV/EBITDA multiple to our 2011 EBITDA estimate.”