OTCPK:CPPMF - Post by User
Post by
personalon Jan 15, 2019 10:52am
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Post# 29233249
TD upgrade
TD upgradeEvent
We are upgrading our recommendation to SPECULATIVE BUY from Hold, given the ~67% return to our target price and potential near-term copper growth from Eva and New Ingerbelle.
Impact: NEUTRAL
Near-term production strength expected at Copper Mountain mine
— Although we expect a relatively modest decline in copper production from the Copper Mountain mine in 2019 (76.3mmlbs Cu at C1 cash costs of US$2.14/lb), the company is guiding for record production in 2020 (86-95mmlbs Cu) and 2021 (81-89mmlbs Cu) on the back of higher grades
. Technical report on New Ingerbelle expected in Q1/19
— It is important to note that the above guidance does not include any potential production from the New Ingerbelle deposit, which is located adjacent to the Copper Mountain mine. In September 2018, the company released a PEA for New Ingerbelle which proposed integrating feed from the deposit into the existing mill following the depletion of current mining operations. The company expects to release a prefeasibility study in Q1/19 that will include options to best integrate the mine plan into the adjacent Copper Mountain operation. This could provide upside to our estimates, as we currently model first production at New Ingerbelle in 2025.
In addition to the potential to integrate New Ingerbelle, the company is reviewing options to restructure its current debt to finance the construction of its Eva copper project in Australia. Management is in advanced discussions on this front and is planning to update the market in Q1/19.
Revised copper price assumptions
— In addition to updating our production estimates to reflect the company's guidance, we have updated our estimates to reflect slightly lower copper price forecasts through 2021.
We model 2019 EPPS of $0.00 and attributable EBITDA of $48.8mm. We model EBITDA increasing to $103mm in 2020, as the Copper Mountain mine moves back into a higher-grade phase of the pit.
TD Investment Conclusion
We are upgrading our recommendation to SPECULATIVE BUY from Hold and maintaining our $1.50 target price. We expect several material updates for the company in over the next six months, including restructuring the company's existing debt and the release of the New Ingerbelle pre-feasibility study