Yeah looks pretty good to me actually. They don't have a lot to work with, grade-wise, but they're making the most of what they have. The Copper Mountain reserves aren't much to get excited about and that C1 cost keeps creeping up, as is to be expected as you approach the end of mine life. As I've shown previously this mine is hovering around breakeven at the current copper price so rising C1 is a bad thing, but I'd expect D&A costs will drop as the mine approaches being fully depreciated, which will hopefully offset the rise in C1.
New Ingerbelle is a similar grade deposit but has the major advantage of not having to pay for a processing plant which should mean significantly lower D&A over the 12 year mine life. The NPV and IRR estimates seem to bear that out. And unlike with a greenfields development I actually trust their cost assumptions, as they have extensive experience of actual costs in that location.
Basically if copper stays around this level it's a reasonable company, but if you're a long-term copper bull you get some real leverage opportunity here. For New Ingerbelle every 10c increase in copper price is +$32.5M NPV.
The Eva feasibility results appear to be pretty much identical to AOH's, which is good. Although despite the comments on Ingerbelle being suitable for little more than road base, it's far more economic than Eva - at consensus copper price forecast, Eva's NPV is 27c per pound of copper, Ingerbelle's is 51c per pound. Really illustrates the value of brownfields vs greenfields projects. Eva also appears to be on hold until they "decide a funding solution" which they claim will be in the next few months, after which they imply they'll progress it. I'll believe that when I see it.
But overall for a company of ~200M CAD market capitalisation, this looks like a pretty good copper leverage play to me. If you are bullish on copper, you could do a lot worse than C6C. The company could be worth 2-3x that market cap at consensus copper price forecasts and at $3.50/lb it could be north of a billion dollar NAV company. Of course, there is risk too as it's a high cost producer and if Trump's trade war hammers China, it could find itself with a big debt pile and three loss-making mines.
C6C Price at posting:
$1.23 Sentiment: None Disclosure: Held
