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PEA on Chilean Copper Project is Strong, Analyst Says

Source: Sid Rajeev

 

November 22, 2022 (Investorideas.com Newswire) With robust economics projected for it, the project is likely to attract prospective financing or joint venture partners, noted a Fundamental Research Corp. report.


World Copper Ltd.'s (WCU:TSX.V; WCUFF:OTCQB) Escalones copper-gold project in Chile will likely garner outside interest given its preliminary economic assessment (PEA) outlined a compelling mining operation, one that surpassed the expectations of Fundamental Research Corp., reported its head of research Sid Rajeev in a Feb. 18 research note. As such, Fundamental raised its fair value estimate on World Copper to CA$2.28 per share from CA$2.02.

"We believe the PEA puts the company in a strong position to attract joint venture/financing partners," commented Rajeev.

Trading at a discount

Currently, the copper explorer-developer is trading at about CA$0.84 per share, or 5% of the after-tax net present value discounted at 8% (NPV8%) of both Escalones and Zonia (at a US$3 per pound copper price), Rajeev pointed out.

This is significantly lower than its peers, which are trading between 20% and 40% of after-tax NPV8%. Fundamental rates World Copper Buy.

What the PEA Shows

Rajeev reviewed the highlights of the Escalones PEA. Incorporating 86% of Inferred resources, the report outlines an open-pit operation with a 50,000-ton-per-day throughput and 20-year life of mine (LOM). The LOM is longer than Fundamental expected it would be.

The base case, relayed Rajeev, shows that at a copper price of US$3.60 per pound and after tax, Escalones would have an NPV8% of US$1.5 billion (US$1.5B) and an internal rate of return (IRR) of 46%.

At US$4 per pound of copper, the NPV8% would increase to US$1.8B and the IRR to 53.6%. Post-tax capex and opex are relatively low and lower than what Fundamental anticipated.

"After incorporating the PEA's opex/capex/mine life estimates, our after-tax NPV8% estimate on Escalones increased from CA$226 million (CA$226M) to CA$552M," Rajeev indicated.

Next Steps at Projects

World Copper is well-positioned financially to proceed with its 2022 work plan for both projects. It has $2.5M in cash and $19M in in-the-money options and warrants.

The company will do resource expansion drilling at Escalones. At Zonia in Arizona (the acquisition of which just closed), plans call for definition drilling and updating the PEA.

"Drilling results and/or mergers and acquisitions could be catalysts for World Copper this year," wrote Rajeev.

Disclosures:

1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: World Copper Ltd. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of World Copper Ltd., a company mentioned in this article.

Disclosures For Fundamental Research Corp., World Copper Ltd., Feburary 18, 2022

The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any "forward looking statements" are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness.

There is no guarantee that our forecasts will materialize. Actual results will likely vary. The analyst and Fundamental Research Corp. "FRC" does not own any shares of the subject company, does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject company. Fees were paid by WCU to FRC. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct.

Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. To further ensure independence, WCU has agreed to a minimum coverage term including an initial report and three updates. Coverage cannot be unilaterally terminated. Distribution procedure: our reports are distributed first to our web-based subscribers on the date shown on this report then made available to delayed access users through various other channels for a limited time.

This report contains "forward looking" statements. Forward-looking statements regarding the Company and/or stock's performance inherently involve risks and uncertainties that could cause actual results to differ from such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products/services in the marketplace; acceptance in the marketplace of the Company's new product lines/services; competitive factors; new product/service introductions by others; technological changes; dependence on suppliers; systematic market risks and other risks discussed in the Company's periodic report filings, including interim reports, annual reports, and annual information forms filed with the various securities
regulators. By making these forward-looking statements, Fundamental Research Corp. and the analyst/author of this report undertakes no obligation to update thesestatements for revisions or changes after the date of this report.

A report initiating coverage will most often be updated quarterly while a report issuing a rating may have no further or less frequent updates because the subject company is likely to be in earlier stages where nothing material may occur quarter to quarter. Fundamental Research Corp DOES NOT MAKE ANY WARRANTIES, EXPRESSED OR IMPLIED, AS TO RESULTS TO BE OBTAINED FROM USING THIS INFORMATION AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OR FITNESS FOR A PARTICULAR USE. ANYONE USING THIS REPORT ASSUMES FULL RESPONSIBILITY FOR WHATEVER RESULTS THEY OBTAIN FROM WHATEVER USE THE INFORMATION WAS PUT TO. ALWAYS TALK TO YOUR FINANCIAL ADVISOR BEFORE YOU INVEST. WHETHER A STOCK SHOULD BE INCLUDED IN A PORTFOLIO DEPENDS ON ONE'S RISK TOLERANCE, OBJECTIVES, SITUATION, RETURN ON OTHER ASSETS, ETC. ONLY YOUR INVESTMENT ADVISOR WHO KNOWS YOUR UNIQUE CIRCUMSTANCES CAN MAKE A PROPER RECOMMENDATION AS TO THE MERIT OF ANY PARTICULAR SECURITY FOR INCLUSION IN YOUR PORTFOLIO. This REPORT is solely for informative purposes and is not a solicitation or an offer to buy or sell any security.

It is not intended as being a complete description of the company, industry, securities or developments referred to in the material. Any forecasts contained in this report were independently prepared unless otherwise stated and HAVE NOT BEEN endorsed by the Management of the company which is the subject of this report. Additional information is available upon request.

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