Cyprium Metals Ltd (ASX: CYM) is working to bring the former Nifty copper operations back into production, with the analysts at Canaccord Genuity convinced the company is undervalued at its current share price.
The company's board last year approved a restart plan for the resumption of copper cathode operations at the Nifty copper complex in the Paterson region of Western Australia, where the company will initially re-leach the heap leach pads to recover "significant remaining copper''.
Image source: Getty Images
Production imminent
The company expects to restart production by the middle of this year.
Cyprium Executive Chair Matt Fifield said of the restart plans last year:
As a brownfield restart, some of our great advantages are sunk capital and time. Establishing initial cathode production from our above ground heap leach resources is a low-risk way to produce meaningful cash flow. The restart also is strategically important as it enables accelerated future growth from open pit and regional ore sources.
A previously-published prefeasibility study for the cathode operations envisages the production of 6000 tonnes of copper from the existing heap leach pads.
The company raised $80 million last year and another $41 million in January to progress its development plans, with the $41 million raised at 52 cents per share, compared with the current share price of 38 cents.
Mr Fifield said the most recent capital raise allowed the company to "accelerate workstreams progressing the next phase of the Nifty Copper Complex which involves expansion of SXEW (solvent extraction-electrowinning) capacity, designing and building a surface mine to access the shallow open-pit oxide ores and the sulphide ores beneath it''.
He added:
We are also developing resources outside of the Nifty Copper Complex that could quickly come into a production plan. In particular, we have recently re-acquired control of the exploration grounds adjacent to Nifty that host multiple advanced targets on significant legacy exploration data. We expect to leverage this data and create meaningful developments for Cyprium as we continue to build Australia's next great copper company.
Shares looking cheap
Canaccord said in a research note to its clients that they saw significant potential for Cyprium to extend the mine life at Nifty "through the inclusion of low-grade stockpiles and, once mining commences, the addition of new oxide and transitional material''.
They added that they modelled two scenarios for further expansion at Nifty, one involving a three-year extension and one where mining continues indefinitely.
They added:
Under the three-year extension, we would see a 54% improvement in our price target to $1.00 per share and under continuous operations our price target would increase 100% to $1.30 per share.
Canaccord then discounted its target price to 65 cents per share, based on the fact that "the sulphide plant is yet to be financed and the oxide re-leaching carries a degree of risk on ramp-up".
Cyprium Metals was added to the All Ordinaries Index on its recent rebalance on March 23.
The company is valued at $219.7 million.
