i hope a few are watching..., page-18

Bell Potter have put a sell on it .06 target:


Perseverance Corporation - (PSV.AX - A$0.10) Sell Target: A$0.06

Perseverance has reported a loss of $19.7m for FY07 vs UBSe of a $9.1m loss. Gross profit from operations was $50.6m, above UBSe of $44.4m, however other costs were all higher than our estimates, and the result included an impairment on the Fosterville asset. The impairment reflects the new mine plan which is expected to see 1.1Moz produced at and average cost of A$513/oz to 2014. We have modelled the cashflow for Perseverance over the next few quarters, and at the current A$ gold price we expect cashflow to remain tight. Although exploration can be deferred, Perseverance has a heavy capex programme over the next 12 months to access new ore underground. While we continue to believe that Perseverance has good exploration potential, in our view they are yet to demonstrate consistent production performance, and in an environment where costs and the A$ continue to be unfavourable and the gold price is moving sideways we see little opportunity to substantially improve cashflow in the near term. Hence we have downgraded to a Sell rating. Under the UBS forecasts, and assuming the current mine plan, PSV generates minimal FCF. We have set our price target at $0.06, our base case NPV scenario under spot pricing. Using an expansion scenario we believe PSV could be worth A$0.14, however in our opinion this option would only be available with additional funding.