Nevada Copper Corp T.NCU

Alternate Symbol(s): T.NCU.WT.C | NEVDQ

Metals & Mining Copper

Nevada Copper Corp is a Canada-based mining company. The Company is engaged in the development, operation, and exploration of its copper project (the Project) at its Pumpkin Hollow Property (the Property) in Western Nevada, United States of America. Its two fully permitted projects include the high-grade Underground Mine and processing facility, which is undergoing a restart of operations, and a large-scale open pit PFS stage project. The Property is located in northwestern Nevada and consists of approximately 24,300 acres of contiguous mineral rights including approximately 10,800 acres of owned private land and leased patented claims. Pumpkin Hollow is located approximately 8 miles southeast of the small town of Yerington, Nevada in Lyon County, one- and one-half hours drive southeast of Reno. The Company’s wholly owned subsidiary is Nevada Copper, Inc.

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Nevada Copper Corp

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Post by Notgnuon May 14, 2021 12:24am

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Post# 33201456

Another possibility

We could have a few suitors sniffing around. NCU is a strategic fit for several companies. We have a significant percentage of iron in our our which could be separated by adding a separate curcuit BHP and Vale come to mind in this regard.

Iron has surged to about three times the price it was when the NI 43-101 was done. Perhaps others' here have already done some calculations on this add on potential??

Other large suitors: Hudbay (with their nearby Yerington project,) Rio Tinto because they have the Kennecott mine with their own nearby smelter (so concentrate by rail to Utah,) Barrick because they want more copper in their portfolio (if I remember correctly,) and I am quite certain there are a few other cash flush majors that can easily put an attractive bid together for either a buy-out or a JV.

Cheers,
Notgnu

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And again, for new NCU buyers:

Welcome to NCU >>> Things are really coming together now after many years of building this new (relatively very high grade) mine.

These are great days to buy from the fearful and the short term players. I have some friends all adding today.

NCU is a mine now and $4.00 copper is beyond amazing for the metrics of this operation over the long-term.

See my working document below. I am happy to answer anything that is unclear and to hear about anything I am clearly missing.

Cheers,
Notgnu

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Copper would have to fall below $3.00 for it to matter to NCU

NCU has only just begun to price in the fact of not going bankrupt. Other copper miners have already responded to the new copper environment with many having increased by 200% to 500% in recent months. NCU is not rated yet as a producer but rather as a "developer." We know this is outdated. We are now a "producer," only we are priced as a "developer."

At $4.00 and higher copper, NCU will track up 400% ($1.50 area) from today's price in another 18 months or so.

Cheers,
Notgnu

==============================================================

Current underground mine as a stand alone after ramp up at $4.70 copper:

65 million pounds per year x $2.84 ($4.70 - $1.86 = $2.84)

Free cash-flow of about $184 million USD per year at a conservative, low 5 X cash-flow multiple = $923 million, divided by 1.8 billion shares = $0.51 USD = $0.62 CAD

OPEN PIT (valued as not yet developed at $4.70 copper:)

IRR (7.5% discounted) of 44% (extrapolated from NCU's Oct 2020 presentation)

NPV of $2.35 b/ 1.8 b shares = $1.30 (then discounted 75% by me) = $0.33 USD = $0.40 CAD

Total share price:$0.62 + $0.40 = $1.02 CAD

My numbers on the underground mine after ramp up combined with the future
open pit:

at $4.50 copper, 2.3 billion fully diluted shares and 70,000 TPD open pit:

70,000 tpd X .005 copper equivalent X 88% recovery X 2000 pounds per ton X 365 days per year = 225 million pounds plus 65 million pounds from underground = 290 million pounds X ~ $2.50 profit = $725,000,000 free cash-flow per year.

$0.725 billion p/year cash flow X5 multiple = $3.63 billion / 2.3 billion shares = $1.58 USD p/s

$0.725 billion p/year cash flow X6 multiple = $4.35 billion / 2.3 billion shares = $1.89 USD p/s

$0.725 billion p/year cash flow X7 multiple = $5.08 billion / 2.3 billion shares = $2.21 USD p/s

$0.725 billion p/year cash flow X8 multiple = $5.80 billion / 2.3 billion shares = $2.52 USD p/s

$0.725 billion p/year cash flow X9 multiple = $6.53 billion / 2.3 billion shares = $2.84 USD p/s

$0.725 billion p/year cash flow X10multiple =$7.25 billion / 2.3 billion shares = $3.15 USD p/s

$1.96 CAD to $3.91 CAD per share

At $5.00 copper, 2.3 billion fully diluted shares and 70,000 TPD

70,000 tpd X .005 copper equivalent X 88% recovery X 2000 pounds per ton X 365 days per year = 225 million pounds, plus 65 million pounds from underground = 290 million pounds X ~ $3.00 profit = $870,000,000 free cash-flow per year.

$0.87 billion p/year cash flow X5 multiple = $4.35 billion / 2.3 billion shares = $1.89 USD p/s

$0.87 billion p/year cash flow X6 multiple = $5.22 billion / 2.3 billion shares = $2.27 USD p/s

$0.87 billion p/year cash flow X7 multiple = $6.09 billion / 2.3 billion shares = $2.65 USD p/s

$0.87 billion p/year cash flow X8 multiple = $6.96 billion / 2.3 billion shares = $3.03 USD p/s

$0.87 billion p/year cash flow X9 multiple = $7.83 billion / 2.3 billion shares = $3.40 USD p/s

$0.87 billion p/year cash flow X10multiple =$8.70 billion / 2.3 billion shares = $3.78 USD p/s

$2.36 CAD to $4.72 CAD per share

A consolidation of the share count WILL happen soon
June 17 is the AGM. Consolidation will be announced then. The ratio is unknown.
I am hoping for 20:1 thus the fully dilluted share count goes from about 2.3 billion to 115 million.

Reasons I own NCU:

Future open pits have gold and silver credits not pre sold in any stream deal

Future open pits are already permitted to allow 70,000 tpd production

Copper running way beyond the $3.20 price assumptions in the NI-43-101

The new mill is successfully ramping up to 5000 tpd capacity (prob ~50% now)

Full copper production 3rd quarter 2021

Minimal hedges roll off soon

Covid uncertainty reduced now with vaccines out

No insider selling for 10 yrs despite past issues

Banks lending at reasonable rates

Highly experienced CEO with 3,500,000 share rights which align him with us.

A mining friendly jurisdiction with plenty of experience labour available

A share consolidation to be announced June 17 2021 = institutional buying and margin
Expansion drilling underway, so decades more resources will be added

Potential risks include:
Problems with the mine plan leading to more cost
Copper price dropping a lot
Mine accidents
Another Covid shut down

Interpretation of the 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.

Insider average share cost:

Pala / Iorich ~40 % owner > $0.51 (calculated as of January financing)

NCU director Nutter > $0.32 (calculated as of Dec 2020)

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

NCU: Some history on the underground portion:

Throughout 2019 copper prices declined about $0.75 per pound, from ~$3.00 to ~ $2.25 (March of 2020) This was the first major hit to the share price. The NI 43-101 assumed an average price of $3.00.

Quote: "Consensus prices per the 2019 NI 43-101 Tech Report : US$2.83 – 3.20/lb Cu"

Covid shut the mine down just when start up production was about to occur. Copper ~$2.25 at the time. NCU dropped to $0.24

The share price continued to decline and only in June 2020 did it have a small pop back to the $0.20 area, presumably because copper went to ~$2.75 thus making the mine viable again (all in cost of $1.89 underground, leaving $0.86 per pound net profit.)

Cash was needed to get to positive cash-flow and support debt obligations thus the now infamous dilution and refinancing at a about net $0.14

Shareholders bailed on mass with the tax loss season and covid doom in the air, leaving the share price to hit 2020 lows of ~$0.07 to $0.10

Since then both the copper price and importantly, the outlook for copper, have improved markedly. This affects everything. NCU is affected more than most because going from almost bankrupt, to having a very profitable outlook, creates a larger leverage effect than going from profitable to more profitable (as is the case with other low hedged, mid sized copper mines)

Since the life saving July 2020 financing NCU's marginal profit is now 250% of what it was then ($2.14 vs $0.86 p/pound) Note: the $2.14 today is based on $4.00 copper, minus $1.86 AISC

During the time copper prices went up the mine build progressed amazingly well. The mill was tested to run great at 'nameplate" of 5000 TPD and the underground hoisting and ore crushing have successfully been commissioned... a shout out to the new CEO and the NCU team.

NCU's hedging is relatively small and applies to only the first 6 months of 2021 leaving the vast majority of the copper open to the new higher copper prices.

The recent financing converted another big piece of debt to equity so the balance sheet is in great shape.

Despite the troubles in the past there has been no insider selling for 10 years and insiders hold a lot of stock cumulatively, with Pala / Iorich holding about 60% at an average price that is greater than $0.51.

An additional 83 million tons of ore may be available underground because it is extremely economic at plus $4.00 copper.

More drilling will be done to confirm the size and grade of this ore body and it may easily increase.

The current "measured and indicated" category is 54 million tons at 1.39% copper and the "Inferred" is 29 million tons at 1.09% copper. (these are in addition to the 13 years [24 million tons] of 1.6% that we are about to start mining.)

Taken together there is another approximately 60 million tons of about 1.2% copper in the measured / indicated category (also subject to more drilling expansion) to provide an additional 27 years of mill feed using 6000 tons per day.

The math is: 60 millon ton / 6,000 tpd / 365 days a year = 27 years.

The grade is (about) 1.2% copper average

So, 6000 tpd X 365 days per year x .012 grade X .9 recovery X 2000 p per ton = 47 m pounds of copper per year for additional 27 years above the first 13 years.

At $4.70 copper ($2.84 p pound free cash-flow) X 47 m pounds = $133 m per year underground

So this is another 27 years of $133 million USD per year, beyond the first 13 years of $184 million USD per year ($4.70 copper.) (see above calculation.)

Corporate presentations:

https://nevadacopper.com/site/assets/files/4190/ncu_october_2020_final.pdf

https://nevadacopper.com/site/assets/files/4209/2021-03-ncu-cp.pdf (Last presentation)

Robert Pavich Video (last 10 minutes is best)

https://www.youtube.com/watch?v=hk_WhFu7FlA&feature=emb_logo

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Summary of key NCU news releases:

2013, Sept 9: (copper~$3.30)

>>>Final permit for underground mine build, plus loan financing.

2013, Nov 14: (copper~$3.20)

>>>Stand alone open pit feasibility study filed using $2.75 copper

2014, Dec 15: (copper~$2.75)

>>>Land bill passed by Senate and House of Reps

2015, May 28: (copper~$2.45)

>>>Feasibility results. Mine life increased by 5 years.

>>>A description of economic results with three base case scenarios for copper.

2015, June 1 - July 15: (copper~$2.25)

>>>Three more positive drill result releases, including 400’ of 1% copper.

2015, Aug 17: (copper~$2.25)

>>>Full permit for open pit is obtained

2015, Aug 21: (copper~$2.25)

>>>BLM conveys 10,000 acres of land to NCU.

2015, Sept 10 & Nov 3: (copper~$2.20)

>>>Two more sets of positive drill results

2016, June 9: (copper~$2.15) $4.8 million raised at $0.60.

>>>Total shares NCU shares outstanding = 88 million

2017, May 23: (copper~$2.55)

>>>Pala P.P. 10% premium to the market = $0.66 for 3.7 million shares.

>>>Total NCU shares outstanding = 93 million

2017, Dec 17 and 2018, Jan 12: (copper~$3.20)

>>>Construction financing and debt restructuring

2018, Feb 26: (copper~$3.20)

>>>Restart of underground mine construction after the raising of more funds.

2018, March 5: (copper~$3.10)

>>>$128 million from Pala for an additional 256 million shares. $0.50 each

2018, May 15: (copper~$3.05)

>>>Open pit extension drill results including 42 metres of 2% copper

2018, July 17: (copper~$2.75)
>>>Additional equity financing. $108 million, $0.60 per share;

>>>Total NCU shares outstanding = 660 million

2018, Sept 6: (copper~$2.60)

>>>$70 million received in exchange for (underground only) Au & Ag metal stream.

2018, Sept 10: (copper~$2.65)

>>>PEA received for the open pit using $3.20 long term copper.

2018, Nov 13: (copper~$2.75)

>>>Announcement to update technical report to include new info and PEA

2019, Feb 22: (copper~$2.75)

>>>Announcement of 5,700 additional acres staked for exploration, thereby expanding the Pumpkin Hollow property by 32%

2019, April 16: (copper~$2.90)

>>>New open pit PFS study published with updated numbers ($3.20 long term copper price is used)

2019, May 16: (copper~$2.70)

>>>$40 million combined private placement and public share sale $.040

2019, Dec 16: (copper~$2.80)

>>>Copper production commenced and ramp up to full 5000 tpd expected by mid 2020.

>>>65 m pounds p/ye projected from underground. Cost = $1.86 (all in sustaining cost)

2019, Dec 17: (copper~$2.80)

>>>Pala announces buying shares in the public market at $0.29 per share

>>>Pala’s total of the financing =273 million shares, ~ 36% of shares outstanding.

>>>New float is roughly 758 million shares

2020, April 6: (copper~$2.25)

>>>Covid necessitates a shutdown of the newly completed mill

>>>Underground work continues at reduced pace.

2020, July 31: (copper~$2.85)
>>>Equity sale completed. 667 million shares including the over-allotment

>>>This raises $100 million to pay down debt and cover expenses.

>>>New share price is about $0.14 after backing out about $0.02 per warrant attached.

2020, Aug 24: (copper~$2.95)

>>>Production is restarted

>>>Commissioning of hoist, vent shaft and underground crushing continues

2020, Oct 15: (copper~$3.05)

>>>Mike Ciricillo is brought on board as CEO. Mike “...was previously the Head of Copper Industrial Operations for Glencore Plc, where he oversaw Glencore’s worldwide copper assets…”

2021, Jan 29: (copper~$3.55)

>>>Equity financing; 230 million shares issued at $0.16 for proceeds of $38 million.

>>>Pala takes down an additional 80 million shares as a part of a debt to equity trade.

>>>New share total = 1.7 billion. Warrants will bring in about $100m

2021, March 18: (copper~$4.05);

>>>Some 5% ore is encountered in ‘development’ area on route to the new stopes

>>>Expect “grade increases” in combining weeks as stopes are accessed

>>>Hoist is tested to run at 5,000 TPD matching the tested mill capacity

>>>Electrical upgrades mostly completed (due to change in first stope to mine)

2021, April 21: (copper ~ $4.25):

>>>We are a few days away from the first stope to start extracting 2.2% copper

>>>Ventilation upgrades are progressing well

>>>Batch production is running very well at intermittant bursts of 4,700 tpd as development (and soon) new stope ore is being mined.

Ventilation remains the primary constraint to increased production but some intermediate solutions (before arrival of the big surface fans) are being enacted.

A majority of the investment in proving and building this new mine came from shares issued at much higher prices, during a time when the copper outlook was anemic and copper was below $3.00.

Now is the right time to accumulate. Earnings will, of course still be negative for a year but cash-flow will come fast with copper over $3.50 (now over $4.50.)

The longer term profit will be immense and will pay this asset off very quickly, including the cost of building the (permitted) open pit portion.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Barrick CEO on copper as strategic

>>> NCU is permitted!

https://www.bnnbloomberg.ca/investing/video/barrick-gold-ceo-says-copper-is-a-fantastic-strategic-asset~1907821

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NCU 2021 start up production and cash-flow pro-forma (underground only)

2nd quarter: April, May, June:

Average blended grade of 1.3% copper

Average mining and milling rate 3000 tpd

Average $4.30 copper

Hedge portion of 2.1 m pounds

Production above the hedge (3000 tpd X 1.3% copper X 90 days X 2000 p per ton X 90% recovery = 6.3 m pounds, minus hedged amount = 4.2 m pounds