Nevada Copper Corp. (NCU : TSX | SPECULATIVE BUY, Target C$5.90) – Nevada
Copper’s primary asset (100% ownership) is the Pumpkin Hollow copper project in
Nevada. The company is currently working on a Definitive Feasibility Study (DFS) that
will evaluate alternative project development options for the large integrated open pit
and underground operation and stand-alone high-grade operation at Pumpkin Hollow. A
large-scale operation at Pumpkin Hollow could generate about of 200 million lbs of
copper in concentrate per year. Completion of the DFS is anticipated by June 30, 2011,
which we believe will create the potential for the first of several re-rating opportunities
for the shares. The company aggressively anticipates production from Pumpkin Hollow
as early as H2/13. Pumpkin Hollow hosts M&I resources totalling 5.6 billion pounds of
copper (0.58% Cu) plus additional inferred resources of 3.7 billion pounds of copper
(0.42 % Cu) (0.2% copper cut-off ) and 1.45 million ounces of by-product Au and 183
million tons of Fe (magnetite) grading 24.5%.
For NCU we estimate an after-tax NPV (10%) of US$525 million for Pumpkin Hollow. Our
total non-risk adjusted diluted NAV (10%) estimate for Nevada Copper is US$782 million.
Our 12-month target of $5.90 is based on a 0.70x multiple on our curren