Copperstone Resources - Additional funding secured going into 2021

Rights issue 1. 6x oversubscribed Strong Cu price development of +17. 5% YTD Fair value range of SEK 0. 7-2.

3 per share Rights issue of SEK 170m completed – 1. 6x oversubscribed We expect Copperstone to report Q4’20 net sales of SEK 0m, EBIT of SEK -2m and net profit of SEK -10m. In Q4’20, Copperstone announced a rights issue to secure further financing.

The response was positive, and the rights issue ended up 1. 6x oversubscribed. As a result, SEK 170m was raised during Q1’21 and an extraordinary expense related to the rights issue amounting to SEK 7m will occur in Q1’21.

The additional financing is a step in the right direction, and will be used to finance working capital needs for the coming 18-24 months and prepayment of the additional purchase price to Sunstone Metals of SEK 26m. The plan to obtain the environmental permit is expected to remain unchanged, with the aim to submit a permit application in H2’21. Mineral value increase from strong Cu price At the current Cu price of USD 9,098/tonne (+17.

5% YTD), the value of Copperstone’s measured, indicated, and inferred Cu resources amounts to SEK 61. 6bn (+11% vs. SEK 55.

5bn as of previous research update). We continue to expect a solid long-term outlook for copper demand due to its usage in products such as batteries and wind turbines. Overall, we keep our ’20e estimates unchanged but due the extraordinary expense that will occur in Q1’21 we lower our ’21e EBIT estimates from SEK -7m to SEK -14m.

Revised fair value of SEK 0. 7-2. 3 per share due to dilution Despite taking a further step towards production by securing additional financing, several hurdles remain before production commences, which we still expect to occur in ’24.

Due to the rights issue causing significant dilution (c. 53% increase in outstanding shares) and adjustments made to SOTP valuation weights, we derive a fair value range of SEK 0. 7-2.

3 (1. 1-2. 8) per share.

Finally, we argue that the company’s strong portfolio of mineral assets and a so.