In response to a question on the IVN thread, about Ivanhoe's verious project valuations I received this following response and am posting it for everyones amusement.
I know what I think of this Scotia report, and of it's motivation, but I will leave it for others to decide. I will comment on it after others have had a chance to.
Cheers,
Notgnu
46 minutes ago
18 Reads
Post# 33236088
RE:RE: Valuation ratio to understand IVN better ?
Notgnu I dare you to take this back to your NCU board and repost. It is the current report from Scotia. I will await the repost.Maybe it will stop your cheerleading. These guys are going backwards in the best bull market in history.
Nevada Copper Corp. Ramp-up Delays and Liquidity Concerns Return
OUR TAKE: Negative. We have updated our estimates to reflect the release of NCU's Q1/21 financials. The anticipated timeline for the Pumpkin Hollow underground mine reaching its nameplate capacity of 5,000tpd has further slipped to Q4/21 (vs. Q3/21 previously). Moreover, the company consumed significantly more cash than we had anticipated during the quarter. Given the operational delays and the weaker liquidity position, NCU disclosed that it will need to secure additional sources of financing to complete the ramp-up.
Overall, we view the update as negative for the shares. Despite an attractive valuation and a markedly improved Cu price environment, we rate NCU shares Sector Perform based on heightened operating and balance sheet risks.
Our 12-month target of C$0.25 per share is based on 0.6x our 10% NAVPS estimate.
KEY POINTS Ramp-up further delayed. Q1/21 throughput of only 1,300tpd was 27% below our forecast of 1,800tpd and was 23% below the Q4/20 level of 1,700tpd. Lateral underground development progress has been temporarily slowed due to cautious progress through a water bearing dike (this is expected to continue for several more weeks). As a result, NCU is now anticipating substantially lower than planned production in Q2/21.
The company is now targeting a June throughput exit rate of 3,000tpd. Due to expected shipping delays, NCU now anticipates that the commissioning of the required surface fans will not be completed until Q4/21 (vs. Q3/21 previously), which will delay the ability to reach the nameplate 5,000tpd throughput rate by a similar period. Weaker-than-anticipated liquidity. NCU exited Q1/21 with cash of only $10M and a largely unchanged net debt position of $187M (vs. $185M at Q4/20) driven by $38M in negative FCF.
Given the operational delays and the weaker liquidity position, NCU disclosed that it will need to secure additional sources of financing to complete the ramp-up. The company has already secured an additional $10M loan from Pala. We estimate that ~$53M in anticipated near-term warrant proceeds should be sufficient to get the balance sheet through the ramp-up (assuming no more material delays).
Negative estimate revisions. Given the ongoing ramp-up challenges, we have further reduced our 2021E-2023E Cu production estimates to 19m lbs, 50m lbs, and 60m lbs (vs. 29m lbs, 57m lbs, and 60m lbs previously). We have also pushed back the anticipated development of the open-pit by an additional year with startup now in 2025.
Our updated 10% NAVPS of C$0.39 declined by 13%.