where to now , page-5

Raymond James coverage, as mentioned in National Post.

Anvil Mining announced the cancellation of the C$237.3 million private placement with Catala Global Limited (a trust for the benefit of family members of Dan Gertler). Deteriorating market conditions for resource companies were cited as the reason for the cancellation.

Action

We recommend buying Anvil shares.

Analysis

We have adjusted our model to account for the cancellation of the private placement and have increased our net asset value estimate to C$22.91 from C$19.60. Our EPS estimates increase by approximately 30% to account for the fewer shares outstanding. We estimate that the company will generate sufficient cash to fund its capex program without external funds.

The press release acknowledged that discussions with Catala are ongoing, but it is possible the company may look at other alternatives for funding the development of its project pipeline. Anvil is essentially debt‐free.

In our view, with ~US$200 million on its balance sheet, the company has significant flexibility in the near‐term to search out other sources of funding for its planned production expansion program. Based on our analysis, only by assuming the unlikely price of US$2.50/lb copper from
today onwards would the company face a worrying but “small” cash shortage of approximately US$20 million sometime in 3Q09, assuming the company does not deviate from its previously announced plans.

Valuation

Anvil shares are inexpensive in our view and trade at P/NAV of 0.24 times versus the peer group of copper producers at 0.55 times.