Terrane Metals Corp. TICKER: TSX.V:TRX DESCRIPTION: Terrane Metals Corp. is a Canadian mineral development and exploration company. The cornerstone of its business plan is to develop large-scale mineral deposits with defined resources into operating mines. Key assets are the Mt. Milligan copper/gold project in central British Columbia and the Berg copper/molybdenum project in west central BC. Mt. Milligan has open pit reserves of 1.6 billion lbs. contained copper and 4.6 Moz. contained gold. Upon development, the project will have an average annual production of 265,100 oz. gold and 97M lbs. copper for the first six years of a 15.3-year mine life. Goldcorp Inc. owns a 59% equity interest in Terrane on a fully diluted basis.
"Molybdenum producer Thompson Creek Metals Company has made a 'friendly' offer to acquire Terrane for $0.90/share in cash and 0.052 TCM shares per Terrane share. The offer is subject to 66.7% shareholder approval (vote in September), but has already received support from Goldcorp Inc. (58%). The key asset behind the transaction is Terrane's 100%-owned Mt. Milligan copper/gold project in BC.
Impact: Positive: Based on Wednesday's closing prices, the offer equates to about $650M or $1.41 per Terrane share—a modest premium to Haywood's 12-month target price of ≥$1.35/share; hence, our revised TENDER rating. . .Earlier this year, Terrane secured funding for the majority of Mt. Milligan's $132M 2010 capital cost budget. . .In our opinion, TCM's offer provides good value to Terrane's shareholders. We find it difficult to refute an offer of $1.41/share 'today' that is in line with (modest premium to) our 12-month target and still offers risk-adjusted exposure to upside in the Mt. Milligan story through ownership in TCM shares."
The Gold Report Interview with James West (08/13/10)
Catherine Gignac, NCP Northland Capital Partners
(08/20/10)
"The value of the proposed transaction is in line with our target price; as such, we recommend investors tender to the offer in order to receive cash and participate in the upside as Mt. Milligan is developed, as well as receive exposure to Thompson Creek Metals’ (TCM-T, Not Rated) growing molybdenum production. The offer from TCM consists of $0.90/share in cash and 0.052 shares of TCM for every share of TRX (TCM closed at $9.31/share).
The fully permitted Mt. Milligan Project is expected to have revenue split 50/50 between gold and copper, which presented more opportunities for financing with relatively low technical risk. To now be perceived as an operator with growth, the new TCM could be competitive vs. other base metal peers such as Quadra FNX, in our view."
Canaccord Capital, Morning Coffee
(07/16/10)
"Mount climbing. One of the largest molybdenum producers in the world announced that is bolstering its portfolio of assets with the purchase of junior miner Terrane Metals in a $650-million cash-and-stock deal that will give it ownership of the Mt. Milligan copper/gold project in central BC. . .Terrane shareholders will receive $0.90 cash and 0.052 of a Thompson Creek share for each share held, a deal which values Terrane at $1.41/share, a 21% premium to Wednesday's closing price. . .Concurrently, Thompson Creek also reached a gold-stream deal with Royal Gold (RGLD) to purchase 25% of the life-of-mine gold production from Mt. Milligan. Under the terms of the arrangement, Thompson Creek will get staged cash deposits totaling US$311.5M; US$226.5M of which will be paid on closing of the acquisition and US$85M to be paid during mine construction. Mt. Milligan contains proven reserves of 274.6 million tons averaging 0.21% Cu and 0.44 g/t Au and probable reserves of 207.8 million tons averaging 0.19% Cu and 0.32 g/t Au. The project is construction-ready and expected to begin production in 2013."
Stefan Ioannou, Haywood Securities
(06/30/10)
"Mt Milligan's low grade (0.20% copper and o.39 g/t gold reserve grade) inherently translates into a highly leveraged production profile. As a result, increased gold and copper pricing in Haywood's commodity price forecast has prompted a revised 12-month target price for Terrane: now $1.35 per share from $1.00 (+35%), which remains based on a 1.0x multiple to our fully financed after-tax corporate NAV 8%-10%. In turn, this target price increase has prompted a revised SECTOR OUTPERFORM rating (from Underperform). . .Our formal valuation remains based on H2/13 production start-up—a modeled target we will continue to closely monitor as additional financing initiatives ensue."
Terrane Metals Corp. 
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