Cyprium Metals Limited

Company Overview: Cyprium Metals Limited (ASX: CYM) is an Australian copper developer and explorer that owns a portfolio of near-term development projects focussed in Western Australia. The company’s exploration portfolio includes Nifty Copper Mine, Maroochydore Copper Project, Paterson Exploration Project, and Murchison Copper Project. The company is focused on growing the value of its shareholders by acquiring, advancing, and developing a portfolio of projects to produce copper efficiently and sustainably.

CYM Details

Key Takeaways from H1FY21 Results:

• Completed the Acquisition of Paterson Copper Assets: One of the important highlights of H1FY21 was the completion of the acquisition of highly attractive Paterson Copper Assets comprising Nifty Copper Mine, Maroochydore Copper Project, and Paterson Exploration Project.
• Sulphide Mineralization Intersected at Nanadie: At its Nanadie Well Copper-Gold Project, the company undertook Phase 1 diamond drilling programme, which intersected sulphide mineralisation at shallow depths ranging from 45m to 341m downhole.
• Rise in Cash Balance: As at 30 June 2021, the company had cash of $50.6 million, up from the cash balance of $5.37 million as at 31 December 2020.
• Increase in Losses: For H1FY21, the company incurred a net loss of $10.93 million, compared to the loss of $894k in H1FY20.

Cash Balance Trend (Source: Analysis by Kalkine Group)

Key Metrics: Due to the rising cash balance, the company’s current ratio has increased to 6.93x in H1FY21, up from 3.04x in H1FY20. Quick ratio for H1FY21 stood at 6.16x, up from the industry median of 1.37x. Debt to Equity ratio for H1FY21 stood at 0.29x.

Liquidity Profile (Source: Analysis by Kalkine Group)

Top 10 Shareholders: The top 10 shareholders together form around 14.47% of the total shareholding, while the top four constitute the maximum holding. Ilwella Pty. Ltd. and Mackenzie Financial Corporation are holding a maximum stake in the company at 4.25% and 2.56%, respectively, as also highlighted in the chart below:

(Source: Analysis by Kalkine Group)

Positive Drilling Results from Nifty East: On 28 September 2021, the company announced that it has received the first assay results from Nifty east drilling program. The results demonstrate that the copper mineralisation is extending from the former Nifty open pit and has the potential to grow the existing resource further east.

Key Risks:

• Commodity Price Risk: The company is exposed to the risks related to the fluctuations in the copper prices, as it could impact its financials.
• Exploration Related Risks: The company’s prospects are dependent on the results of its ongoing drilling and exploration programs. If the exploration results are not satisfactory, it will impact the prospectivity of the company’s projects.

Outlook: Looking ahead, CYM is focused on growing into a multi-asset, mid-tier copper producer. The company has set a multi-asset strategy to capitalise on global electrification thematic. Since the acquisition of Nifty Copper Mine in March 2021, CYM has rapidly advanced Nifty towards production. So far, it has undertaken significant work to proceed towards development and production. The first copper production from Nifty is expected in late 2022 / early 2023. As a result of the acquisition, the company now has a portfolio of development opportunities with over +1.2Mt of contained copper.

Technical Note:

CYM's prices are sustaining above the upper band of a falling wedge pattern breakout, indicating the possibility of an upside direction hereon. On the daily chart, the leading indicator RSI (14-period) is recovering from lower levels and trading around mid-point at ~47.38, indicating a positive bias for the stock. However, the CMP is hovering around the trend following indicators 21-period SMA and 50-period SMA. Now an immediate support level for the stock appears at AUD 0.185 while resistance is at AUD 0.245 level.

Stock Recommendation: Over the last three months, the stock has corrected by 21.15% and is trading lower than the average 52-week price level band of $0.165 and $0.370. On a TTM basis, the stock is trading at a price to book value multiple of 1.1x, lower than the industry median of 2.5x, demonstrating that the stock might be undervalued. Considering the company’s portfolio of development opportunities, significant progress in the development of Nifty copper mine towards production, current trading level, rising cash balance, technical level mentioned above, valuation on TTM basis, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing price of $0.205, up by ~2.50% as on 27 October 2021.

CYM Daily Technical Chart, Data Source: REFINITIV 

Disclosure: Cyprium Metals Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

Note:  The purple color line in the chart depicts RSI (14-period), while the yellow color line represents the trend line. The sky-blue and red color lines show 21-Period SMA and 50-Period SMA, respectively, while green color histograms at the bottom of charts represent weekly volumes. 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Technical Indicators Defined: 

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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