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2020-02-26

Analysis Kopy Goldfield: Gold price lifts project value

Detta är en betald analys på uppdrag av Kopy Goldfields AB utförd av analysföretaget Carlsquare på uppdrag av Analysguiden.
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Gold prices have continued to rise which leads to higher project valuations. An ounce now costs more than 1600 USD. The drilling program in the Maly Patom area has been concluded without any substantive findings, though the geology supports the possibility of future findings.

Kopy Goldfields has finished the first drilling season in the exploration of the Maly Patom licenses. Although no commercial grade ore bearing layers were found, the structure supports the possibility of such findings of at least 1 Moz of gold. More exploration will be needed.  

Milestone payments from the sale of the Kopylovskoye asset could provide financing in 2020. Without them the company will probably need to find another source of financing in order to perform a second prospecting season in Maly Patom. The company has a loan of SEK 45m with the Scandinavian Credit Fund I AB with a due date in September 2022.

Kopy’s main asset is Krasny. Hence the share price will depend almost entirely on its further development or divestment. Kopy is in a somewhat challenging situation since it lacks the necessary funds to develop the asset. Since GV Gold has a 51 per cent ownership share in Krasny, Kopy is also dependent on their plans. GV Gold itself has been reported to be an acquisition target which complicates matters. Kopy’s lack of financial resources puts them in a weak bargaining position. Nevertheless, the licence has a limit in time, which means that GV Gold will need to start development at some point in order not to lose its rights. The scoping study that AMC published last summer describes several scenarios for further development, including a less capital intensive one with a high IRR involving an underground mine and a highly capital intensive one with a high NPV involving a large open pit. The former is indicative of the value that could be unlocked if Kopy decides to start a mining activity, the latter of the potential value for a buyer.

Due to the increase in the gold price and higher sector valuations we arrive at a higher value of Kopy Goldfields. Our new fair value is SEK 3,0 per share (2.6) 

Författare Richard Ramanius

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