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TSX:NCU

In an article for Seeking Alpha, Iterant restated that Nevada Copper (TSX:NCU) is its prime pick in the copper space, noting that the stock as done well since it picked out Nevada as a top performer a year ago. The latest article from Iterant discusses the latest news from the company and its move from staged to integrated development.

In an article for Seeking Alpha, Iterant restated that Nevada Copper (TSX:NCU) is its prime pick in the copper space, noting that the stock as done well since it picked out Nevada as a top performer a year ago. The latest article from Iterant discusses the latest news from the company and its move from staged to integrated development for its Pumpkin Hollow project in Nevada.

As quoted in the article:

Up until recently Nevada Copper had been following a staged development plan whereby the underground operation would be brought into production as quickly as possible, and the open pit would follow when permits were in place. This staged approach had been driven by the permitting realities on the one hand, and funding considerations on the other.

Success with the land transfer bill suddenly opened up new development options for the project since permits for the open pit can be expected within months now. Nevada Copper has therefore initiated work on a feasibility study assessing an integrated approach which would see the underground and the open pit mine going into production at the same time, in parallel with ongoing work to update and optimize the open pit for the staged approach.

Iterant also discussed the interest of resource investment house Pala in the company:

Resource investment house Pala owns more than 50% of Nevada Copper’s equity. Pala management was shaken up last year, and the ubiquitous portfolio changes have already started to manifest themselves under the new fund manager. However, as the dust is settling we note that Pala continues to support Nevada Copper financially as well as in other ways. This support is evidenced by the $20M bridge loan that was granted late last year and extended to the end of June recently; or managerial support during a recent trip to Asia to meet potential project partners.

Nevada Copper represents a very large holding for Pala, and the investor has purchased shares on several occasions over a four year period, including on the open market. Throughout this time the fund has performed ongoing due diligence and has obviously found performance agreeable. As individual investor we certainly take confidence in Pala’s ongoing support.

It is difficult to determine the average share price at which Pala is invested in Nevada Copper, but we estimate that Pala has paid in excess of C$3.75 per share on average. Pala’s interests are fully aligned with shareholders and we expect that Pala will ensure a profitable exit in the event of a transaction, which would imply a multiple of the current share price of C$1.84.

Overall, the article pegged Pumpkin Hollow as a profitable project even at lower copper prices:

The Pumpkin Hollow project will be North America’s next large operating copper mine. The project has been developed by an experienced team which has a history of keeping its promises and time lines; and which has been successful in securing funding as needed while keeping the share structure tight. Significant de-risking and value-adding has taken place since our last article on Nevada Copper and we remain highly confident with our own investment into this company.

Several catalysts are looming in 2015, including

  • the release of the updated open pit feasibility study,
  • the feasibility study on the integrated project option,
  • and final permits for the open pit mine.

The project is profitable even at currently depressed copper prices, and we have no doubt that numbers will improve further when the updated feasibility studies will be released. The market has taken the cue and we observe the share price starting to outperform peers again. We see no reason why this trend should not continue throughout 2015 and well beyond.

Click here to read the Nevada Copper (TSX:NCU) press release
Click here to see the Nevada Copper (TSX:NCU) profile.

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