Q: AbraSilver has recently closed a bought deal financing at $7.10 with Kinross as one of the buyers to finance its advancement of Diablillos in Argentina. This seems to be a large project so with shares now at $6.29 would you be a buyer? Please comment also on the PAAS outlook.
5i Research Answer:
With ABRA up 171% for the year and market cap over $1B now, it is likely going to keep attracting attention. It has a good project, though we are always a bit more cautious on Argentina due to the political volatility there. But we would consider it a decent speculative stock within the sector at current prices. PAAS is going to see a huge bump in EPS this year (4x or 5x) versus last year. Growth next year should be in the 50% range. The balance sheet has $300M net cash, and it remains one of our favourite large cap silver names. We liked MAG a lot and are interested to see how PAAS proceeds with this acquisition (closed in September).