Equity Research Base Metals | Canadian Small Cap October 23, 2018
Patrick Smith | Analyst | Ubika Research Patrick@UbikaResearch.com | 1 (647) 444-5506
Nicola Mining Inc. (TSXV:NIM) is unique amongst junior mining companies as it expects positive 2019 operational cash flow
Market Data (TSXV:NIM)
Price (October 22, 2018) $0.115
52 Week Range $0.10-$0.21
Market Cap (M) $23.6
Shares Outstanding, Basic & Diluted (M) 205.1
Free Float 79%
Average Daily Volume (3 months) 140K
Last Reported Debt (M)* $8.0
Total Assets (M)*$12.4
Headquarters Lower Nicole, BC
Insiders and Management35%
Concept Capital Management22%
BMO Nesbitt Partners8%
Mountain Valley Partners7%
Peter EspigPresident, CEO & Director
Warwick BayCFO & Corporate Secretary
*As of October 22, 2018 All figures in CAD unless otherwise stated. Source: Company Reports, Capital IQ
Craigmont Property Geology Map
Nicola Mining (TSXV:NIM) is a Strategic Takeover Target
Nicola Mining Inc. (TSXV:NIM; “Nicola”) is a copper explorer advancing its flagship 100%-owned, fully-permitted New Craigmont mine located in Merritt, B.C. The Company also operates the permitted Merritt mill, the only facility permitted to process Au/Ag anywhere in the province. The facility produced gold and silver concentrate in 2016 from Gavin Mines, but is currently awaiting feeds from miners under signed Mining and Milling Profit share agreements. Production has been delayed approximately six months due to hiccups at the mining properties. However, management now has clarity on a restart date and expects the mill to commence processing ores from its partners in late Q4/18 or Q1/19. The Company is unique amongst junior mining companies as it expects positive 2019 operational cash flow while maintaining significant exploration upside. Lastly, Nicola has a silver option to reopen Stope 2 in its Treasure Mountain mine at a relatively low capital cost.
- Ambitious 2018 exploration program to find porphyry. The Craigmont mine was previously in operation from 1962-1982, with over 34 Mt of ore mined at 1.28% Cu, until it closed due to falling copper prices (US$0.60/lb). According to a Technical Report from 1985, the mine left behind ~500M lbs grading 0.42% Cu, with 27,754t grading 1.79% Cu for 1,095,000 lbs Cu in the underground section, with the intention of recommencing operations in the future. Of note, the historical cut-off grade was 0.7% to 1.2% and the stockpile is estimated to have ~88Mt. Nicola Mining is the first company since 1982 to own the Thule property (includes Craigmont), which comprises 10,084 Ha, on a 100% basis. The property continues to remain permitted to mine.
- Currently, an ambitious 2018 exploration plan is underway, targeting five zones with diamond drilling, reverse circulation (RC) drilling, as well as geophysical surveys. While the 80-90Mt historic waste piles exploration encompasses RC drilling other targets including Craigmont Central, Craigmont West, Northwest & East Promontory porphyry are expected to be through diamond drilling. Its key exploration focus is on identifying porphyry in near mine targets of Waste Piles and Craigmont Central.
- Phase I of its RC drilling program on waste piles, comprising 20 drill holes, was completed between May 23, 2018 and June 8, 2018. Results were announced in August, highlighted by the deepest hole returning 0.25% Cu over 40m. Phase II program, expected to commence in the fourth quarter, will drill 100 holes targeting southern Waste Piles and Portal 3060, with the primary goal of delineating copper mineralization and trace the extent of the higher grading material within the waste piles. Based on Phase II results, Nicola expects to report a non-NI-Compliant resource calculation in Q1/19.
- In July, NIM announced the receipt of required permits and the commencement of a diamond drilling program, which consists of 10 initial holes for a total of 5,000m across Craigmont Central (2 holes), Craigmont West (3 holes) and East Promontory (5 holes) sections. Concurrently, geochemical sampling and IP ground geophysics will be conducted at North Promontory zone.
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