Nevada Copper Corp NEVDQ

RE:Okay, let good sense prevail...time to top post again

[Notgnu]

Please ignore the sad old fool of Yerington. He has haunted this board for years and his diapers give him a bad rash... he wait for a once a quarter change with the help of his friend rock. IIItTtcHHy and Grumpy.

Notgnu wrote:

News will come soon... mark my words

There has to be a finalization of the previously negotiated financing (announced Dec, 9)

I am expecting:

• All funds needed will be available at a reasonable rate (with copper the way it is now)
• Probably an update on underground stope development and geo-technical progress
• A share consolidation (hoping anyway) so we can get away from this penny stock problem and get margin to buy up more shares :-)))

Notgnu

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With copper at $3.64 + >>> NCU is massively miss-priced

Using a forward free cashflow multiple of only 5X (not 10X as previously calculated) NCU should now (arguably) be trading at a minimum of $0.29 per share 

• This does not include the increased net value of the future open pits

• This is calculated by taking the $0.70 increase in copper since last financing, multiplyng it by 65 million pounds (annual production at 5,000 tpd,) times the cashflow multiple, divided by shares outstanding and then adding that to the price at the time of financing.

• Thus $0.70 X 65m pounds = $45,500,000 X 5 (multiple) = $227,500,000 divided by 1.5 billion shares out = $0.15 per share extra value from the increase in the price of copper.

• Thus $0.14 + $0.15 = $0.29 per share as a minimum relative to the share price to July.

• But one could also multiply this by 2X again because the company is viable now and not headed to bankruptcy.

• So, assuming the current copper price is some kind of "new normal" it is arguable that NCU could trade today at $0.30 to $0.60 per share.

• That said NCU is only worth what the crowd is willing to pay so???

Hope this helps as a basis of discussion.

Note: I am a shareholder and not an advisor so DYODD

Cheers,
Notgnu

PS call Rich at Investor relations.
He is super straight forward and easy to talk to.

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These are my old posts for those who have not seen them:

Outstanding positive leverage to copper bull *** :-))

I am still buying. 4.5 m and counting!

Using a conservative figure of 65 million pounds per annum and taking a baseline copper price at last $0.14 financining of

The 65 million pounds per annum (after ramp up) is 5000 TPD X .018% underground copper x 2000 pounds per ton X 364 days = 65 million pounds.

At 65 million pounds per annum and a price at last financing in July of $0.14 when copper was $2.95 we get: (or even if the baseline was &3.20 or $3.30 we get:)

• $2.95 = $0.63 X 65m pounds X10 C/F multiple = $0.27 + $0.14 = $0.41 today
• $3.20 = $0.28 X 65m pounds X10 C/F multiple = $0.12 + $0.14 = $0.26 today
• $3.30 = $0.18 X 65m pounds X10 C/F multiple = $0.08 + $0.14 + $0.22 today

 

And copper is going up.
This was based on $3.58 copper 

 

TKO    =    $.016 per copper increase on $1.72 share price = 1% effect

CMMC = $.004 per copper increase on $1.87 share price = 0.2% effect

NCU  =   $.004 per copper increase on $0.15 share price = 2.5% effect

IVN   = ______ per copper increase on $7.47 share price = __% effect

NCU... Cash-Flow an updated look for 2021

The NCU NI 43-101 is almost 2 yrs old so the corporate presentation (necessarily) uses older copper prices

I have been making my own extrapolations based (mainly) on recent copper prices which look to be sustainable for years to come.

Points about NCU focussing on the underground portion:

1. Throughout 2019 copper prices declined from around $3.00 to about $2.25 (March of 2020) a decline of $0.75 per pound. This was the first major hit to the share price because the NI 43-101 assumed an average price of $3.00.
2. Quote: "Consensus prices per the 2019 NI 43-101 Tech Report : US$2.83 – 3.20/lb Cu"
3. Covid shut the mine down just as it was about to get going in March and copper was about $2.25 (an already a low profit propositon) so NCU dropped to a share price of $0.24
4. The share price continued to decline and only in June did it have a small pop back to the $0.20 area... presumably because copper increased to the $2.75 area, thus making the mine very viable again (costs $1.89 underground thus leaving $0.86 per pound net profit.
5. Then came the famous dilution / refinacing at a de facto (yes, bog... look it up again) price of $0.14 (net of warrants) as it was realized that more cash would now be needed to get to positive cash-flow to support debt obligations (partially also related to the small change in the underground mine plan after coming up against some unstable seams of fractured marble.)
6. The deal was done and shareholders bailed on mass with the share price hitting an all time low of around $0.065 to $0.07. Tax loss season was impending and both election and Covid doom and gloom were in the air (I decided to buy and ask questions later... got lucky and have been adding and adding ever since with only a few small sells and re-buys... all of which I have stated here.)
7. The copper outlook and pricing is now hugely improved and this effects everything. NCU is effected more than most because going from almost broke to very profitable has a much bigger leverage effect than going from profitable to more profitable (as i have outlined several times before.)
8. Since the life saving July financing was done NCU's marginal profit is over 60% greater now because using their $1.89 cost and subtracting it from a then copper price of $2.95 to a now copper price of $3.50+ the net Profit jumps from $1.06 per pound to $1.66+ per pound (and goes to double profit if we get to around $4.00 per pound)
9. In the time that the copper price went up the mine build out also progressed amazingly well. The mill is tested to run great at 'name plate" of 5000 TPD and the underground hoisting and ore crushing was sucessfully comissioned... a shout out to the new CEO.
10. NCU is hedged at profitable but lower prices but this is only for a relatively small amoutn of production and only for the first 6 months of 2021 leaving the vast majority of first few years completely unhedged and able to be sold at the hugely beneficial prices above.
11. Earlier in the year there had been the danger of punitive financing cost or another dilution but the last couple of news releases confirm this is no longer a worry anymore as banks are willing to lend (likely more funds than are needed) at LIB +4.9% ... this is a very big vote of confidence.
12. Despite all the troubles NO insider selling has occured 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 $0.55 ... as I have noted several times.
13. There also exists a little mentioned but large upside in the undergroud resource. It consists of an additional 29 million tons of 1.09% copper that is way down in the "inferred" catagory. Drilling can now be effected from underground at a lower cost than surface down drilling (as I understand it.) This means the resource can be greatly expanded. Extraplolating from the NI 43-101 as presented in the Corporate Presentation I get an under ground cost of about $45 per ton. At current copper prices that 1.09% ore is worth about $75 per ton, which gives about $30 a ton of gross profit = 67% profit. This may also increase as more definition drilling is accomplished in the underground.
14. Next we need look more closely at the open pit and open pit shell and grade expansion possiblities which only add to the value propositions here. As it currently stands the underground alone makes NCU worth double the current share price and the open pit, which will be benefitting from the infrastructure build of the existing mine will, simply put, (probably) double or triple the mine value relative to the underground  (hence my previous 6 to 12 month target price of $0.45 to $.0.60 given relatively stable $3.40 to $3.50 copper and that leaves a lot of open pit and copper price value on the table, to double again the share price targets to $0.90 and above.)

Regards,
Notgnu.
Go NCU ... take a look at NWHM... it's a good'n long term IMO
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My previous (2020) post along with cautionary statements:

Insiders likely still Blacked Out... more news soon.

We await:

• Completion of the financing deal (eyes poked and tea spilled.)
• Maybe a share consolidation.
• More news on underground stope and ramp up progress

My Q1 production guesstimate:

• 3000 TPD average for Q1 2021
• full 5000 TPD at the end of Q1

For the new NCU buyers:

My target price remains $0.45 to $0.60 in mid to end of 2021 given copper at an average of $3.40 to $3.50

Some reasons I own NCU shares:

• Fallout from Covid shut down depressed the price dramatically

• First new in 10 yrs USA copper producer
• Copper demand guy is POTUS
• Copper already running up ahead of expectations
• Big leverage to copper price gain
• New mill passed to run at design of 5000 tpd 
• Trading at 0.36  0.42  0.5 X book value

• Full copper production next 6 to 12 weeks

• Hedged only about 25% over next 12 months
• Covid uncertainty reduced with vaccine roll out
• No insider selling for 10 yrs 

• Consolidation = marginable and institutions can buy (I prefer 40:1)

• Banks willing to lend at reasonable rates (interbank rate + 4.9%)
• Highly experienced CEO with 3,500,000 share rights which align him with us. 

 

Risk include:

• Problems with the mine plan leading to more cost
• Copper price dropping a lot
• Mine accidents

• Covid shut down that requires more funding

 

Interpretation of 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.

 

Two methods to asses a new share price:
 

FIRST:

 

• Take NCU's $1.89 cost per pound from the last presentation. 
• Subtract cost from price of copper then = $2.95 - $1.89 = $1.06 profit then.
• Compare to now: $3.54 copper - $1.89 cost  =  $1.65 profit now
• Increase in profit since financing ($0.14) is 64% ($1.06 divided by $1.65)

 

SECOND:

• Take NCU Corporate Presentation numbers = $80,000,000 annual cash-flow, divide by $1.31 ($3.20 minus $1.89 cost) = 61 million pounds of copper per year.
• Sub in your own numbers and then post your share valuation 
• Take copper price now (minus $3.20 )=  $________X  61 million pounds = addition to the yearly cash flow above what Pala had to base his purchases on (Example $0.40 X 61 million = $24.4 million)
• Multiply the $24.4 million X your cashflow muliple number. (Example $24.4m X 10 = $244m)
• Take the $244m and divide by shares out of 1.5b (Example $244m / 1.5b = $0.16)
• In this example add the $0.16 to whatever you think the company share price was worth before (Example Pala's $0.55 + $0.16 = $0.71 ....or.... some lower number like $0.27 (half of Pala)  $0.27 + $0.16 = $0.43
• In any case $0.12 per share comes out a steal (yes, IMO) compared to $0.71 or $0.43.
• Using a 10 X cash-flow the share price is below the calculated additional $0.16 that is added by the copper price having increased

 

Insider average costs:

 

Pala / Iorich    60% owner            > $0.55 

NCU director Nutter                     > $0.32

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

 

1 year cashflow equals current market cap of NCU

 

https://nevadacopper.com/site/assets/files/4190/ncu_october_2020
_final.pdf

 

WARNING: DYODD.

I am not a registered financial advisor

I am a shareholder posting on a forum

Notgnu,

(NCU, some REITS, looking at MIN now and own NWHM) Have a look at NWHM,