NCU new shareholder Notgnu > avg $0.115 My average keeps creeping up (after sarting at about $.08) as it seems major pullbacks are unlikely now, even despite the tax-loss sell possibility > avg. $0.115
My reasons to own NCU shares:
- Trading at 0.4 X book value... crazy IMO
- Fallout from Covid shut down depressed the price dramatically
- Safe & friendly jurisdiction
- Copper demand guy is soon POTUS
- Big leverage to copper price gain
- New mill passed to run at design of 5000 tpd
- Full copper production next 8 to 16 week
- Hoisting and ventilation shafts almost completed
- Hedged only about 25% over next 12 months
- Vaccine news removes much Covid uncertainty
- Copper is 50% higher marginal profit than at last financing (all in cost $1.86)
- Tax loss selling is still an unknown speculation
- Consolidation may happen (I am in favour: margin can be had and institutions can buy (I prefer 40:1)
- Flippers periodically dump into the bid... yes, volitility to be expected
- Shorts probably covered… not sure
- Debt financing basically 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
- Capital will come with excercise of $.20 warrants to fund future expansion.
A general note on NCU share appreciation math:
Commodity price increases benfit higher, cost minimally hedged companies more - Company A produces copper at $0.00 per pound (maybe due to gold credits)
- Company B produces copper at $2.00 per pound
A copper move up from $2.90 to $3.50: - Profit at Company A goes up about 15% or so
- Profit at company B goes up about 75% or so (not exact but you get it)
Company B trades at 0.5X NAV due to dilution fear
Company A trades at 2.0X NAV due to low debt risk
Company B benefits more than company A from new outlook and copper price
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ With copper having gone from $3.00 vs $3.50
With copper having gone from $3.00 to $3.50 the open pit cash-flow projection has doubled since the last financing (at $0.14 with copper under $3.00)
Have a look at slide# 14, The open pit economics go crazy above $3.50 copper
$204,000,000 cashflow... for 19 years
Current market cap of NCU = about $200 million
https://nevadacopper.com/site/assets/files/4190/ncu_october_2020_final.pdf
https://nevadacopper.com/projects/pumpkin-hollow-overview/
Cheers,
Notgnu
Freelance Investor Information for NCU.