Goldcorp: Peak Silver Scenario Raises Target

STEVEN BUTLER, Canaccord Genuity (06/01/2009)
"We have taken the opportunity to refine our valuation of Penasquito (lower gold, silver recoveries offset largely by lower site costs/ton) and Los Filos (increased our 2010+ recovery assumption to 60% from 58%). Our target price has improved with the adoption of our revised US$17.00/oz peak silver scenario for target price setting and a slightly higher target multiple.

The impact of lower recoveries at Penasquito is offset by lower site costs at the same mine and higher recoveries at Los Filos. Our target price has been increased to US$40 (from US$36.50) due to an increase in our silver price used to define equity target prices to US$17.00/oz from our previous assumption based on our long-term deck of $14/oz. Our 5%/$1,100 peak gold/$17 peak silver NAV has increased to US$22.96 from US$22.19, to which we apply a revised target multiple of 1.75 times (1.65 times previously). We continue to rate Goldcorp's shares a HOLD based on relative valuation."

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