Analysts See Attractive Valuation
In a current research report, analysts from Atrium Research focus on the stock of the Canadian resource company Nicola Mining (NIM TSXV / WKN A3D3LF). They rate Nicola Mining as a “Buy” and set a price target of 0.60 CAD. From the price at the time of the recommendation, this represents an upside potential of 97%
As the experts explain, Nicola Mining is a junior company focused on the exploration and development of precious and base metal projects in the Canadian province of British Columbia. Currently, the focus is primarily on copper, as Nicola advances its main project New Craigmont, according to Atrium. The copper project is located near major copper producers (Teck and New Gold are mentioned) and on the site of the historic Craigmont mine, which significantly reduces the risks of exploration and development.
Nicola, the analysts continue, owns and operates an ore processing facility where the company processes ore from its partners and receives a portion of the profits. Additionally, Nicola generates revenue from its sand and gravel pit and quarry, which serve local infrastructure projects.
The cash generated from this supports Nicola’s exploration activities and reduces dilution for shareholders, the experts further explain. And finally, Nicola Mining is exploring the fully permitted Treasure Mountain mine for high-grade silver, lead, and zinc deposits. Treasure Mountain has produced in the past and has a high-grade resource.
In light of all this, the analysts at Atrium Research initiate coverage of Nicola Mining (NIM TSXV / WKN A3D3LF) with a “Buy” rating and a price target of 0.60 CAD per share.
The Investment Thesis
According to the experts, the New Craigmont copper project shows all the signs of a legitimate copper asset, and the historical high-grade copper mine only strengthens their confidence in the company’s discovery of a substantial resource. As it is an advanced project, the development and permitting risks are greatly reduced, according to Atrium.
Furthermore, Nicola uses the processing plant and associated tailings facilities in Merritt for profit-sharing agreements and processes material from partners in the region (We reported). According to Atrium, this business area is just getting started, so they expect more partnerships and thus new cash flow to come. Additionally, the mill could process ore from Nicola-owned projects in the future, they say.
The analysts state that the mill and the company’s business based on its sand/gravel pit and quarry operations provide cash flow without dilution for shareholders. Moreover, Nicola’s sand/gravel pits and quarry are operated by local First Nation communities, strengthening relationships with key stakeholders, according to Atrium.
Regarding the Treasure Mountain mine, Atrium points out that there is a silver, lead, and zinc resource here, and the property is permitted for mineral extraction. Given this, the asset is very attractive for partnerships with other resource companies in the region and can also become an ore source for Nicola’s processing plant.
Attractive Valuation
Atrium Research values the New Craigmont Copper project at $62.5 million, which corresponds to the valuation applied by Nittetsu Mining in 2023. Additionally, a net present value of $25.5 million is calculated for the mill, and another $8.6 million (enterprise value/ounce) for Treasure Mountain. This leads to the price target of 0.60 CAD.
The full research report in English is available at: https://goldinvest.de/wp-content/uploads/2024/10/20241024_Atrium_NIM_Initiation_Report.01.pdf
