PAN – Macquarie rates the stock as Reinstate Coverage with Outperform

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Macquarie reinstates coverage with an Outperform rating and 70c target. The company is in the process of re-starting production at Savannah. First concentrate shipments are expected in January.

The company closed the mine in 2016 because of weak nickel prices. Macquarie expects the current incarnation will be operating at better economics because of improved pay terms and higher average grades at Savannah North, the deposit which transformed the outlook.

This should deliver significant free cash flow. The company is funding the re-start through a $40m debt facility which should be paid in two years.

Sector: Materials.

Target price is $0.70.Current Price is $0.37. Difference: $0.33 – (brackets indicate current price is over target). If PAN meets the Macquarie target it will return approximately 47% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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