Thoughts on CopperBank's Long Term StrategyAs several have mentioned, it has been great to see the share price increase over the last several weeks as both the price of copper has increased and there have been several announcements about the Offering to fund a 2021 drill program on Copper Creek and multiple interviews by Gianni Kovacevic.
CopperBank PR and News Flow
Compared with other positions I have in microcap companies, GK has done a truly remarkable job in consistently and thoughtfully educating potential investors in both where Electrification commodities are very likely headed and how CopperBank as a company is positioned to take advantage of this "Hinge of History".
Asset Sale = Special Dividend?
If the latest call by Citigroup of $4.50/lb in 2021 and $5.50/lb in 2022 plays out, that would bring the current estimated NPV for Copper Creek and Contact Copper to $1.975B (@ $4.50/lb) and $3.082B (@ ($5.50/lb). I think I remember GK stating that the normal value of a property sale is somewhere in the range of 10-20% of NPV. Using 15% as a moderate expectation, this equates to an aggregate property sale of $296.3MM @ $4.50/lb and $463.5MM @ $5.50/lb) or more excitingly presented - $3.65 per share and $5.70 per share with the current 81,249,838 total shares outstanding.
This is all without assuming any new resource estimates being identified in the 15-20 drill hole program planned for 2021 on Copper Creek (targeting District Greenfields, resource Upgrade and Expansion and Property Greenfields) and financed with the recent public offering or anything done to upgrade/enhance Contact Copper.
Spin Out Copper Royalty
Assuming CopperBank puts a 2% royalty where possible on its current property holdings, this will create a long-term revenue stream for any royalty company that CopperBank spins out above and beyond any potential Special Divided. Additionally, I could see the current Management retaining some portion of the proceeds on any asset sales to provide a solid capital base for CopperBank's royalty business to secure other royalties.
Next Up: LithiumBank
In the same vein of Electrification commodities, it looks like GK and Team’s latest venture – LithiumBank, an Alberta-focused lithium company – will be my next significant microcap position. As a US investor, I am hoping this will be cross-listed to the OTC Markets at the same time as any listing on a Canadian exchange. I believe it is likely that any investors in LithiumBank will be able to enjoy the same optionality on Lithium pricing (and growing gap of increased Demand vs Supply) coupled with the clear and consistent PR and News Flow from GK.
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