- Trading at 0.36 X book value... crazy IMO
- No insider selling for 10 yrs
- Fallout from Covid shut down depressed the price dramatically
- Safe & friendly jurisdiction
- First new in 10 yrs USA copper producer
- Copper demand guy is POTUS
- Copper already running up ahead of expectations
- Big leverage to copper price gain
- New mill passed to run at design of 5000 tpd
- Full copper production next 8 to 12 weeks
- Hoisting and ventilation shafts almost completed
- Hedged only about 25% over next 12 months
- Vaccine news removes much Covid uncertainty
- Copper is 59% higher marginal profit than at last financing (all in cost $1.86)
- Tax loss selling soon over
- Consolidation may happen (I am in favour: margin can be had and institutions can buy (I prefer 40:1)
- Debt financing done to access high grade stopes
- Banks willing to lend at reasonable rates (interbank rate + 4.9%)
- Highly experienced CEO on board and he was granted 3,500,000 share rights, which align him with shareholders.
Risk include:
-
Problems with the mine plan leading to more cost
-
Copper price dropping a lot
-
Mine accidents
-
Costs being higher than anticipated
-
Another Covid shut down that requires more funding
Interpretation of 2020 share price collapse:
Covid hit and the mine was shut down. It was bad timing in terms of funds to get production up and running. Cash was not there and it looked like another dilution was to happen
Selling came in with very little buying support. Then the situation changed for the better yet investors were scared.
Two methods to asses share price to value:
FIRST:
- Take NCU's $1.89 cost per pound from the last presentation.
- Subtract cost from price of copper then = $2.95 - $1.89 = $1.06 profit then.
- Compare to now: $3.54 copper - $1.89 cost = $1.65 profit now
- Increase in profit since financing ($0.14) is 64% ($1.06 divided by $1.65)
SECOND:
- Take NCU Corporate Presentation numbers = $80,000,000 annual cash-flow, divide by $1.31 ($3.20 minus $1.89 cost) = 61 million pounds of copper per year.
- Sub in your own numbers and then post your share valuation
- Take copper price now (minus $3.20 )= $________X 61 million pounds = addition to the yearly cash flow above what Pala had to base his purchases on (Example $0.40 X 61 million = $24.4 million)
- Multiply the $24.4 million X your cashflow muliple number. (Example $24.4m X 10 = $244m)
- Take the $244m and divide by shares out of 1.5b (Example $244m / 1.5b = $0.16)
- In this example add the $0.16 to whatever you think the company share price was worth before (Example Pala's $0.55 + $0.16 = $0.71 ....or.... some lower number like $0.27 (half of Pala) $0.27 + $0.16 = $0.43
- In any case $0.12 per share comes out a steal (yes, IMO) compared to $0.71 or $0.43.
- Using a 10 X cash-flow the share price is below the additional $0.16 added by the copper price increase
Insider average costs:
Pala / Iorich 60% owner > $0.55
NCU director Nutter > $0.32
NCU director Albanese > $ 0.41
NCU director Brown > $0.31
NCU chairman Gill > $0.21
NCU senior VP Joseph > $.32
NCU director Cochrane > $0.67
1 year cashflow equals current market cap of NCU
https://nevadacopper.com/site/assets/files/4190/ncu_october_2020_final.pdf
WARNING: DYODD.
I am not a registered financial advisor
I am a shareholder posting on a forum
Notgnu
(NCU, some REITS, looking at MIN now and own NWHM) Have a look at NWHM,