The rationale for investing in this Canadian
mining company is given in this BMO Capital Markets report.
In an Aug. 13 research note, analyst Ryan Thompson reported that BMO
Capital Markets initiated coverage on New Pacific
Metals Corp. (NUAG:TSX.V; NUPMF:OTCQX) with an Outperform (Speculative)
rating and a CA$3.75 per share target price. The stock is currently trading
at around CA$2.64 per share.
Thompson presented the company highlights.
One, Silver Sand, New Pacific's flagship project in Bolivia, could become
a "very large, profitable project," he wrote, based on the scale of
the land package, the mineralization already discovered at the main Silver
Sand area and the prospective mineralized zones. "These projected zones
show characteristics similar to Silver Sand, as evidenced by artisanal mining
and represent several additional drill targets to be tested," added
Thompson.
Two, silver majors Silvercorp Metals and Pan American Silver invested in
Silver Sand, which BMO interprets as a "vote of confidence" in the
project.
Three, New Pacific is on the cusp of completing a resource estimate for
Silver Sand. The report is expected by year-end 2019 with a preliminary
economic assessment to follow in 2020.
Four, Silver Sand is a rarity in that few silver developments projects
exist in the world. As such, it is a "scarce deposit with a high amount
of leverage to the silver price," Thompson commented.
Five, New Pacific signed a mining production contract (MPC) with Bolivia's
state mining entity, COMIBOL, the first ever between it and a private
company. The MPC "outlines a less onerous set of conditions compared to
laws that were established previously," Thompson explained. "We
note that the MPC must still be passed through parliament to be ratified into
law."
Despite the MPC, country risk remains, Thompson pointed out. That and
Silver Sand's early stage warrant the Speculative in BMO's rating on New
Pacific.
The bottom line, Thompson noted, is that "as Silver Sand continues to
advance, we see the potential for shares to rerate higher if the market gains
a better understanding of the potential scale and economics of the project
via delivery of an NI 43-101 resource estimate at year-end."
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Disclosures from BMO Capital Markets, New Pacific Metals Corp.,
August 13, 2019
IMPORTANT DISCLOSURES
Analyst's Certification
I, Ryan Thompson, hereby certify that the views expressed in this report
accurately reflect my personal views about the subject securities or issuers.
I also certify that no part of my compensation was, is, or will be, directly
or indirectly, related to the specific recommendations or views expressed in
this report.
Analysts who prepared this report are compensated based upon (among
other factors) the overall profitability of BMO Capital Markets and their
affiliates, which includes the overall profitability of investment banking
services. Compensation for research is based on effectiveness in generating
new ideas and in communication of ideas to clients, performance of
recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets
Limited are not registered as research analysts with FINRA. These analysts
may not be associated persons of BMO Capital Markets Corp. and therefore may
not be subject to the FINRA Rule 2241 restrictions on communications with a
subject company, public appearances and trading securities held by a research
analyst account.
Company Specific Disclosures
Disclosure 5: BMO Capital Markets or an affiliate received compensation for
products or services other than investment banking services within the past
12 months from Pan American Silver and Silvercorp Metals.
Disclosure 6C: Pan American Silver and Silvercorp Metals are clients (or were
clients) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital
Markets Limited or an affiliate within the past 12 months: C) Non-Securities
Related Services.
Disclosure 16: A research analyst has extensively viewed the material
operations of New Pacific Metals Corp.
Disclosure 17: New Pacific Metals Corp has paid or reimbursed some or all of
the research analyst's travel expenses.
Disclosure 19: BMO Nesbitt Burns Inc. ("BMO NBI") has provided a
fairness opinion to the Special Committee of the Board of Directors of Tahoe
Resources Inc. in connection with the definitive agreement entered into with
Pan American Silver Corp. BMO NBI has been paid a fee. BMO NBI follows
information control procedures which prevent its research analysts who are
issuing research from having access to non-public information received by BMO
NBI's investment banking personnel in connection with the transaction.
Accordingly, it is possible that individual employees at BMO NBI may have
material non-public information or opinions which are not included in, and
may not be consistent with, the information and advice in this research
report.
For Important Disclosures on the stocks discussed in this report,
please click here.
