Ann: Elizabeth Creek Drilling Underpins PFS Advancement, page-2

Posting this on both the COD and CLA boards, because these are now my two top value copper plays now that HAV is being bought out...

Trying to keep it simple and readable, with a few clear numbers!

First, very rough prices being paid for copper developers right now:

COD:
0.7 Mt copper in at Elizabeth Creek (Cu only, not counting Co/Ag)Market cap around 40–45 MilSo call it roughly 60 dollars per tonne of copper in the ground

CLA:
1.6 Mt copper in the MCB global resource, plus about 1.3 Moz goldMarket cap mid 30s MilSo roughly 20–25 dollars per tonne of copper in the ground

Now compare that to the two big SA copper deals we’ve just watched:
HAV / Kalkaroo with SFR:About 1.1 Mt Cu in the resourceSFR is in for roughly 210 Mil in staged payments for 80%Plus 30 Mil exploration spend and the free carry to FID on HAV’s 20%

RXM / Hillside with MACH:About 1.9 Mt Cu in the resourceScheme values RXM around 390 MilHillside DFS NPV in the 800+ Mil range at older prices

Work backwards and HAV and RXM are effectively getting something like:
HAV: around 150–200 dollars per tonne Cu once you allow for the gold and the carry
RXM: close to 200 dollars per tonne Cu for Hillside
HAV and RXM deals both 150–200/t Cu

So, very roughly:
CLA at 20–25/t Cu
On a conservative $/t copper basis (re-rating it from ~20–25 $/t now to a discounted ~90 $/t vs HAV/RXM at ~150–200 $/t), I get roughlyCLA around 4.5 cents a share! (From 1.2 cents) About a 5X

COD at about 60/t Cu
On a conservative $/t copper basis (re-rating it from 60 $/t now to a discounted 120 $/t vs HAV/RXM at ~150–200 $/t), I get roughlyCOD around 25 cents a share! (From 12 cents) About a 2X

On NPVs it tells the same story..

COD’s latest scoping study with the new whole-ore chloride leach flowsheet has:
Post tax NPV7 around 850 Mil at about 4.20 USD a pound copper and 30 USD silver
Spot case they published already gets the post tax NPV up over 1.2 Bil with slightly higher copper, higher silver and a weaker AUD

CLA’s MCB scoping has:
Post tax NPV8 around 460 Mil USD at 4.00 USD a pound copper and 1,695 USD gold
At the 2021 spot case they showed it jumps to around 620 Mil USDIf you plug in today’s much higher copper and crazy gold price, it’s not hard to see it running up towards 0.9–1.2 Bil USD on paper

Meanwhile HAV and RXM:
Kalkaroo old PFS NPV was about 560 Mil at very low copper and gold prices
Hillside DFS post tax NPV was about 850 Mil at older, lower prices
Yet the real world deals came in at:
HAV/SFR: only a couple of hundred Mil for 80% plus the carry
RXM/MACH: about 390 Mil for the equity
In other words, good copper projects being bought for more like 0.3 times NPV in the real world150–200+ dollars per tonne of copper

If you apply that sort of 0.2–0.3x NPV range to COD and CLA at something close to today’s metal prices, you get:

COD:
Post tax NPV on a spot style deck looks roughly in the 1.4–1.6 Bil range on paper0.2–0.3 times that gives 370–520 Mil takeout price value range
Versus a 40-ish Mil market cap, could be 8-10X

CLA:

Post tax NPV on spot style prices looks roughly 1.4–2.0 Bil AUD on paper once you factor in much higher copper and gold0.2–0.3 times that is 350–600 Mil type numbers
Versus a mid 30s Mil market cap, so again 10–15X

There are obviously reasons for both discounts.
CLA: Philippines country risk, older 2021 study numbers so you’d expect higher capex and opex in the new FS, even though they now have a mining licence and government support and investement money lined up
COD:Tier one jurisdiction in SA, in BHP and SFR’s new backyard, but whole-ore chloride leach and mechanical cutting underground are not yet proven at this scale, so the market wants a PFS/DFS and pilot work before it values COD like HAV or RXM

Both:Big capex relative to current size, a lot of work still to do, and no guarantee anyone ever bids

But for me, when I look at the copper space:
COD:About 60/t Cu
Big, high margin NPV in SA, priced at a few percent of what HAV/RXM type deals suggest could be possible if it all comes together

CLA:About 20–25/t Cu
High copper and gold NPV in a more risky jurisdiction, again priced at a few percent of what similar scale projects are fetching elsewhere

Two very different risk profiles, same basic story, serious copper inventories and NPVs, but trading way below where recent copper deals like HAV and RXM have cleared!

As always, GLTAH and NFI!