TD UPDATEEvent We have updated our estimates to reflect the latest NI 43-101 mine plan for Copper Mountain.
Impact: SLIGHTLY POSITIVE
The revised mine plan is primarily focused on mining operational improvements. The key areas of changes include the remobilization of idled haul trucks, opening additional mining faces and accelerating stripping, in our view. The improvements in the mining operations are expected to deliver improved mine flexibility and access to higher-grade ore earlier in the mine life. The plan also includes ~$23mm in capex in 2025/2026 to expand the mill to the permitted capacity of 50ktpd by 2027 vs. the current nominal capacity of 45ktpd).
The revised mine plan is accretive to our NAV and EBITDA forecasts for 2024/2025. The primary drivers of the positive change in our NPV is improved cost performance, with lower cash cost over the next 10 years vs. our previous estimates. Capex and deferred stripping over the 10-year period is also lower; however, more heavily weighted towards 2024-2029 vs. previous estimates.
Our NPV-8% estimate for the Copper Mountain mine has increased to $515mm (from $413mm previously). Our Copper Mountain copper production estimates for 2024 and 2025 are now 37.1kt and 40.0kt, respectively (37.7kt and 39.1kt previously) at lower cash costs of $2.50/lb and $1.76/lb ($2.91/lb and $2.61/ lb previously).
2025 FCF has declined only slightly, despite a substantial pull-forward of capex and deferred stripping. Our FCF estimates for 2024/2025 are now $486mm and $247mm ($448mm and $257mm previously), the lower cash costs largely offset the substantially higher capex and deferred stripping of $88mm and $205mm for 2024/2025 (vs. our previous estimate of $74mm and $60mm).
TD Investment Conclusion We are maintaining our BUY recommendation; our target price has increased slightly to C$10.50 (from C$10.00).