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Copperstone Resources: Digging into the new Viscaria figures - ABG

Expansion of the Viscaria project announced
Viscaria estimates revised – mainly affecting ’24e onwards
New fair value range of SEK 1.1-2.4 (0.7-2.2) per share

Copperstone recently announced the expansion of its flagship project, the Viscaria mine. In summary, the company has communicated an initial 10-year life-of-mine (LoM) plan where the annual production run-rate is increased to 3 Mt (prev. 2 Mt) at 1.0% Cu grade. The company has also increased the total estimated capex required to SEK 3,000-4,000m (prev. 1,500m) and the estimated annual net profit to SEK 850m (prev. 400m). The estimated cash cost is raised from USD 3,600/t to 3,900/t. While the current plan only assumes a 10-year LoM, we argue that due to the current Cu resources and the company’s exploration targets, Viscaria is likely to have a significantly longer total LoM. Following the announcement, we took part in an onsite investor roadshow, gaining more insights into the newly updated Viscaria figures.

Our view is that the incremental investments announced are value-accretive and we therefore raise our fair value range to SEK 1.1-2.4 (0.7-2.2) per share. We use three DCF scenarios based on a 10-, 15- and 20-year LoM and derive a new value range for Viscaria of SEK 0.8-1.8 (0.4-1.5). For the other projects (EVA, Granliden and Svartliden) we continue with our EV/mineral value multiple approach, leading to only minor value changes for EVA and no changes for the other projects.
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