Copperstone Resources - Debt write-down strengthens balance sheet
Capital gain realised from SEK 46m debt write-down Q4 PERC 2017 Cu resources amounted to 699 ktonnes Unchanged fair value range of SEK 0. 7-2. 3 per share Realised capital gain drives SEK 16m net profit Copperstone reported Q4 net sales of SEK 0m (ABGSCe SEK 0m) and EBIT of SEK -4m (ABGSCe SEK -2m). During the quarter, the company finalised an agreement with Sunstone Metals, which includes a SEK 26m prepayment for the additional purchase price for the Viscaria mine.
As part of this agreement, Copperstone’s debt to Sunstone of SEK 46m was written down in full, thereby creating a capital gain of SEK 20m. As a result, Copperstone’s net profit for the quarter amounted to SEK 16m, and net profit adjusted for the capital gain amounted to SEK -4m (ABGSCe SEK -10m). After the write-down, Sunstone Metals holds no further claims on Copperstone.
Going forward, management highlights that the major focus for 2021 will be to work on the application for the environmental permit. Q4’20 mineral boost, ’21-’23 estimates unchanged The company’s portfolio of mineral assets increased significantly during Q4’20 after the successful exploration campaign at Viscaria, which was announced in a December press release. At the end of Q4’20, the amount of PERC 2017 compliant Cu resources amounted to 699 ktonnes (vs.
609 ktonnes in Q3), and PERC 2017 iron ore veins were also uncovered, which constitute a valuable by-product. While the increase in mineral assets during Q4’20 is positive in the long term, it does not affect our short-term outlook. We therefore leave our estimates for ’21-’23 unchanged.
Fair value range of SEK 0. 7-2. 3 per share Copperstone has strengthened its financial position after the debt write-down in Q4’20 and the cash injection from the rights issue completed in Q1’21, which we argue reduces the company’s need to raise more capital in the short term.
For 2021, the most important aspect for Copperstone should be to proceed with the submission of the environmental per.
