Copperstone reported Q1 EBIT of SEK -3m (ABGSCe -5m), on higher capitalised exploration expenditures (SEK 47m, ABGSCe SEK 41m) but also somewhat higher opex (SEK 50m, ABGSCe 46m). What we find most important to highlight, though, is that the environmental permit application for the Viscaria project was submitted in March, as the company had planned. As it awaits approval, Copperstone is continuing with preparatory work as well as drilling activities (the company expects to give a mineral resource update in Q4’22). All in all, things are progressing according to plan, and the next hurdle to cross is to get the permit approved, which the company expects will happen in mid-’23.
Viscaria to generate ~SEK 1bn EBIT at full capacity
Although we make some smaller estimate changes, increasing near-term capitalised expenses for exploration as well as opex, our long-term estimates for the Viscaria project remain unchanged. We continue to estimate that the first revenues from Viscaria will come in H1’24e, after which the project should ramp up to an annual run-rate of 3mt milled ore at 1.0% Cu grade. At full capacity, we expect revenues of ~SEK 2.5bn and EBIT of ~SEK 1bn, respectively, from Viscaria.
Fair value of SEK 1.1-2.4 reiterated
As mentioned, Copperstone submitted the environmental permit application on time and we make no changes to our long-term assumptions for the Viscaria project. As such, we reiterate our fair value range of SEK 1.1-2.4 per share. Finally, we note that each milestone that is reached, such as submitting the extensive 4,000-page permit application, lowers the project execution risk.
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