Attractive Valuation
In a recent research report, the analysts at Atrium Research looked at the shares of the Canadian natural resources company Nicola Mining (NIM TSXV / WKN A3D3LF). They describe Nicola Mining as a “buy” and see a target price of CAD 0.60. Based on the share price at the time of the recommendation, this means an upside potential of 97%
As the experts explain, Nicola Mining is a junior focused on the exploration and development of precious and non-ferrous metal projects in the Canadian province of British Columbia. According to Atrium, the current focus is primarily on copper, while Nicola is advancing its flagship project New Craigmont. The copper project is located close to major copper producers (Teck and New Gold are mentioned) and in the area of the historic Craigmont mine, which significantly reduces the risks of exploration and development in the analysts opinion.
According to the analysts, Nicola owns and operates a processing plant in which the company processes ore from its partners and receives a share of the profits in return. In addition, Nicola generates revenue from its sand and gravel pit and its quarry, which serve local infrastructure projects.
The cash generated from this will support Nicola’s exploration activities and reduce dilution for shareholders, the experts continue. Last but not least, Nicola Mining is exploring the fully permitted Treasure Mountain mine for high-grade deposits of silver, lead and zinc. Treasure Mountain has had production in the past and the mine has a high-grade resource.
In light of all this, analysts at Atrium Research are initiating coverage of Nicola Mining (NIM TSXV / WKN A3D3LF) with a “buy” rating and a price target of CAD 0.60 per share.
Investment thesis
The New Craigmont copper project has all the signs of a legitimate copper asset, according to the experts, and the historic high-grade copper mine only strengthens their confidence in the company’s discovery of a sizable resource. As it is an advanced project, development and permitting risks are greatly reduced, Atrium says.
In addition, Nicola uses the processing plant and associated tailings facilities in Merritt for profit sharing arrangements and processes material from partners in the region (we reported). Atrium believes that this business is just getting off the ground and expects to see more partnerships and therefore new cash flow. In addition, the mill could also process ore from Nicola’s projects in the future, they say.
The mill and the part of the company’s business, which is based on its sand/gravel pit and quarry operations, provide cash flow without dilution to shareholders, according to the analysts. In addition, Nicola’s sand/gravel pits and quarry are operated by local First Nation communities, which strengthens relationships with key stakeholders, Atrium says.
With regard to the Treasure Mountain mine, Atrium points out that there is a silver, lead and zinc resource there and that the property has been approved for mineral extraction. In view of this, the asset is deemed very attractive for partnerships with other resource companies in the region and could also become a source of ore for Nicola’s processing plant.
Attractive valuation
Atrium Research values the New Craigmont copper project at 62.5 million dollars, which corresponds to the valuation that Nittetsu Mining had applied in 2023. In addition, a net present value of 25.5 million dollars is calculated for the mill and a further 8.6 million dollars (enterprise value/ounce) for Treasure Mountain. This leads to a price target of CAD 0.60.
The full research report is available at: https://goldinvest.de/wp-content/uploads/2024/10/20241024_Atrium_NIM_Initiation_Report.01.pdf
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