World Copper Ltd (TSX-V:WCU, OTCQB:WCUFF) has a healthy balance sheet and is expected to publish a key preliminary economic assessment (PEA) on its flagship Escalones copper project in Chile in February, according to Fundamental Research Corp, which has started coverage of the stock with a 'Buy' rating.
Escalones already boasts a large copper oxide resource, with an inferred resource of 3.45 billion pounds of copper at a grade of 0.37%.
"As the resource is in oxides, the project’s OPEX/CAPEX are expected to be significantly lower than typical porphyry (sulphide) projects," highlighted Fundamental's analysts in the initiation note.
The company is also in the process of acquiring the Zonia copper-oxide porphyry project in Arizona, via its purchase of Cardero Resource Corp (TSX:CDU), where a PEA in 2018 returned an attractive net present value (NPV) of US$447 million using a price of US$4 per pound of copper.
READ: World Copper has flown under investors' radar, but for how much longer as it nears a value inflexion point?
Fundamental Research analysts estimate that the company's shares are trading at 17% of that valuation for Zonia, and receiving no value at all for Escalones.
The company also has a 'healthy' balance sheet, with over $3 million in cash, plus in-the-money options and warrants totaling $19 million, the analysts noted.
"We believe low inventory levels, inflation, and global supply chain disruptions, will support copper prices in H1-2022," they said, adding that they believe rising production costs will keep long-term copper prices above US$3 a pound.
Shares in World Copper are currently changing hands in Toronto at C$1 each and the research house puts a fair value estimate on the shares of over double that at C$2.02.
Contact the writer at giles@proactiveinvestors.com