AUS
NZ
UK
CA
USA
IND
Summary
- Copper stocks rallied after the metal crossed US$7,000 per ton-mark on the London Metal Exchange on Thursday.
- Nevada Copper Corp reports net loss of US$2.5 million in Q2 2020 due to Covid-19 impact on mining activities.
- Marimaca Copper generates net income of US$10.4 million in Q2 2020
Copper stocks rallied in the Canadian equity markets after the industrial metal touched its highest price since June 2018 on Thursday. The metal crossed US$7,000 per ton-mark on the London Metal Exchange’s three-month copper futures during intraday trade. The surge was led by recent developments in renewable space, supply worries from top producer Chile and the economic growth in China, which imports about half of the world’s copper. Copper stocks on the TSX such as Nevada Copper Corp. (TSX:NCU) and Marimaca Copper (TSX:MARI) have gained investors’ attention this year.
With many industrial uses of copper, particularly in electrification, construction, cable wires and electric vehicles, copper stocks are gaining momentum over gold and other precious metal stocks. Copper is also a critical element in the ongoing renewable energy revolution, with many analysts touting it as the ‘green’ metal.
Since most copper stocks are cheaper over gold stocks, many traders choose to invest in this industrial metal. The industrial metal benefits both from tightening supply and increasing demand, which means the risks are lower in comparison to other metal stocks.
Let us look at the performance of copper stocks Nevada and Marimaca:
Nevada Copper Corp. (TSX:NCU)
Current Stock Price: C$0.09
Nevada Copper Corp is a copper exploration company and owner of Pumpkin Hollow Copper Development Property located at Yerington, Nevada (US). Production at this property, which is rated as the World’s No.1 mining jurisdiction by Fraser Institute, began in December 2019.
The company announced appointment of new CEO Mike Ciricillo in October. Following the temporary suspension due to coronavirus outbreak, the company resumed concentrated copper production at the Pumpkin Hollow on August 24, 2020.
Nevada Copper Corp plans to increase its ongoing monthly ore production rates and expects to achieve 5000tpd production during Q1 2021.
NCU STOCK PERFORMANCE
Nevada Copper stock been on a steep decline post Covid-19 outbreak. The stocks are down 75.34 per cent this year.
Current market capitalization of the company is C$133.94 million. As per data on TSX, the profit-to-book (P/B) ratio is 0.321 and profit-to-cash flow (P/CF) ratio is 22.50. No dividend is declared by the company as of date.
NCU FINANCIAL HIGHLIGHTS
For the second quarter ended June 30, 2020, the company’s operating expenses increased to US$2.44 million from US$1.54 million in Q2 2019. It posted net loss of US$2.5 million, as compared to a net income of US$0.5 million for the corresponding period in 2019. This loss was driven by US$1.6 million increase in professional fees related to accounting and legal expenses, US$1.3 million in stock-based compensation and US$2.5 million derivative fair value gain.
The cash and cash equivalents as of June 30, stood at US$1.62 million in Q2 2020, as compared to US$25.47 million in June 2019, and capital commitments due for the next 12-months amounts to US$8.6 million. The cash used in operations was US$7.0 million in Q2 2020, as compared to US$2.5 million during the same period, last year.
Marimaca Copper (TSX:MARI)
Current Stock Price: C$3.27
Marimaca Copper is primarily engaged in copper exploration and development of new copper mines in Chile. The Marimaca Project in Northern Chile is in the low altitude Coastal Copper Belt, not far away Antofagasta, the copper capital, and the port town of Mejillones. Through series of acquisition and purchase agreements, Marimaca Copper has a control over the area owing a significant amount of land across the region.
MARI STOCK PERFORMANCE
YTD performance of the stock shows gains by over 100 per cent. In the last three months, the scrips have advanced by over 23 per cent and up 4.47 per cent in last one month.
Current market capitalization of the firm is C$210.45 million.
The stocks offers earnings per share (EPS) is C$0.08 with a profit-to-equity (P/E) ratio of 41.40, profit-to-book (P/B) ratio of 4.088 and profit-to-cash flow (P/CF) ratio of 29.00, as per data on the TMX site. Return on equity (RoE) and return on assets (RoA) is 2.36 per cent and 1.42 per cent, respectively. No dividend is declared by the company thus far.
MARI FINANCIAL HIGHLIGHTS
According to second quarter financial results for period ended June 30, 2020, the company had cash of US$2.1 million and total assets of US$64.5 million. Total liabilities were US$16.1 million. Due to Covid-19 the company reduced all its on-ground exploration activities, maintenance and care expenses related to Nora and Ivan plant.
The company posted a net income of US$10.4 million in Q2 2020, as opposed to a net loss of $4.0 million in Q2 2019. This decrease in loss is because of the gain on asset disposal of US$12.7 million and the reduction of US$0.6 million in exploration expenditures and US$0.8 million in care and maintenance expenses. Cash and cash equivalents for Q2 2020 decreased to US$2.07 million, as compared to US$4.82 million seen in the same period, last year.
