GREY:NEVDQ - Post by User
Post by
Notgnuon Aug 24, 2021 6:37pm
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Post# 33758902
The best way to look at NCU >>>
The best way to look at NCU >>>There will be NO bankruptcy.
If Pala gets tired of the situation the whole project will be sold to a major for $0.50 to $1.25 a share depending on competition between bidders
More likely the project will simply continue as planned but will have to absorb this last delay to commercial production by adding some more debt.
The debt to asset value (not the debt to market cap) is small. The NAV at $3.75 copper is about $2 billion and at $4.50 copper it is over $3 billion. Sure, discount that some more. It still comes up at $0.50 per share.
In two or three years this property produces about 280 million pounds of copper per year for a lot of decades.
How does NCU get there?
1) The underground adds some more debt and then the revenue / cash flow at $4.00 plus copper starts paying back the debt in 2022
2) Next year a strategic investor puts in $1.2 billion to bulid the open pit.
3) During that time either share dilution or credit cost add another $1.2 billion.
4) Assume $4.50 copper (yes, it could be $3.50 or $5.50) and 280 million pounds per year and you undeniably get $700 million in cash flow.
5) A large reputed mining company running the show will get a 10X to 12X multiple
8) Assume an 11 X multiple (in between) and get a company value of $7.7 billion, minus the $2.4 billion budget (more than enough) outlined above for a total of $5.3 billion
9) In share price terms that is about $2.30 per share today.
10) That is about a 2200 % 3 or 4 year return on today's share price... and yes it could be more or it could be less.
So is 50 to 80 cents out of the question? No is the correct answer.
Cheers,
Notgnu