Ecora Resources PLC (LSE:ECOR, TSX:ECOR, OTCQX:ECRAF) is undervalued by the market and currently stands at a discount to even the worst-case prognosis, says broker Berenberg.
A mining royalty stream specialist, Berenberg notes Ecora's key commodities such as cobalt and metallurgical coal have come under pressure this year.
Delays to non-producing assets in its royalty/streaming portfolio (West Musgrave nickel/copper) have also contributed to the weak share price performance.
Berenberg adds however that even on a severe downside scenario, which it says is very unlikely to occur, there is still upside to the current share price.
Its worst-case NAV estimate is 69p per share and reflects 'trough' met coal prices, spot cobalt and excludes all development projects, but even with all this the share price is at a 13% discount currently.
Many of the developments, such as BHP’s West Musgrave, will ultimately be built, the broker believes, with its middle range or base-case NAV 163p per share.
Recommending the shares as a 'buy' with a 150p target, Berenberg expects the share price to be ‘materially higher’ in the short to medium term.
Shares today were trading at 62.7p, up 4%.