currently 2 times fy09 earnings

55c will do me nicely.

Tamaya A Buy For Production And Earnings Growth
FN Arena News - August 20 2007

By Chris Shaw

It is not only stocks at the big end of town that have suffered in recent weeks as juniors with solid prospects have also been sold off as investors have rushed for the exits.

An example is Tamaya Resources (TMR), which Shaw Stockbroking notes has been sold down from recent highs around 35c to the levels of early May, closing last week at 21c.

The company offers exposure to rising gold and copper production in Chile following its merger with Iberian Resources earlier in the year, as well as exploration prospects in Portugal and Charters Towers in Queensland and the Lichkvaz-Tey project in Armenia.

Production in Chile is currently being expanded to 3,000 tonnes per day of throughput, which puts the company on track for eventual copper output of 28 million pounds annually. Resources in the region have also increased following the company’s acquisition of Latin America Copper Chile announced last month.

The broker has lifted its price target on the stock to $0.42, suggesting investors buy the stock at prices below $0.25 and accumulate shares at levels between $0.25-0.30. The value on offer is obvious in its view, as it estimates the current market capitalisation of the company of around $200m represents a multiple of just two times FY09 earnings.

On the broker’s numbers the stock should more correctly be priced at around four to five times earnings before interest, tax, depreciation and amortisation (EBITDA), which implies a price of 45-55c. Even such a multiple is value when compared to larger capitalisation companies, which it notes tend to trade at around 10 times EBITDA.

Supporting its view is the company’s earnings outlook, Shaw estimating EBITDA will double in 2008 to US$43m, before doubling again in 2009 to US$88m. While cash flows will be tight they also support the broker’s estimates, as does the potential for the company to become a takeover target after its planned listing on the Toronto Stock Exchange (TSE) next year.

Only ABN Amro covers the stock according to the FNArena database, though the broker has not updated since a Buy recommendation in February. Shares in Tamaya are higher today and at 1.15pm the stock was up 3c at $0.24, while its range for the past year has been $0.17-$0.35.