Proforma FCF yield of 26.2% is imminent - rising to 67.1% in 2027.
Highlights
NKL is a producer of battery metals with royalty/streaming exposure focusing
on nickel and cobalt. Its three primary assets are interests in world class
nickel-cobalt projects. Ramu in Papua New Guinea (8.56% shareholding) is
already in “steady-state” production. Dumont (1.75% NSR) and Turnagain
(2.0% NSR) benefit from Canadian jurisdiction, solid environmental credentials
and Dumont is “shovel ready”. Management and shareholders interests are
aligned with the former owning 19.0%.
In 2021, two catalysts should drive a share price re-rating and eliminate the excessive discount to NKL’s fair valuation shown in the table below.
· Ramu is poised to generate free cash flow (FCF) for NKL shareholders with the first tranche of project debt paid off this quarter; and
· Dumont’s owner has appointed a bank to step up its search for a partner in the largest nickel sulphide resource discovered since 1960.
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