Why ATICO is one of my favourite stock at the moment ?
Because it is a very promissing explorer Cu/Au company and one of the cheapest Cu/Au producing company.
What's the valuation metrics ?
1. El Roble (producing assets, in Gran Colombia, 90% owned)
Cu current production rate : about 5.5m lbs per quarter, i.e. about 22m lbs yearly.
Gold comes as a Cu by product, they are producing about 2.5k per quarter, i.e about 10k oz per year.
With Copper price at about $3.5 per lb and about $1850 per Au Oz, the revenues would be about (3.5x22)+(1.85*10)= 95.5m usd per year, or about C$122m per year.
What are the costs ? About C$115 per ton proceeded, with about 300kt per year, it makes about C$35m.
G&A are about C$4m per year.
EBITDA = 122-35-4 = C$83.
EV = Mcap-cash-debt = 66-10-0 = C$56
(Cash is from Q3 NR, it might be actually higher since oct and nov months might have generated nice FCF).
EV/EBITDA = 0.67
What's the expected life of the mine ? about 4 year. It is a very old mine and some drilling are scheduled to extend the ressources. It is very likely they can be extended.
2. La Plata (VMS prospect in Equador, 60% owned, with 15% more in option)
VMS assets in Equador. High grade of gold and copper. Some recent excellent drills interception will extend the ressources.
Before the last drilling, the AuEq were more than 650k oz. High grade + multiples VMS system.
Total worth is more than 1.2B with actual Gold and Copper prices.
The new drilling reveled that it was a multiple VMS system and that the ressources can be extended from the latest RE.
This very promissing assets that itself would worth about the actual EV of ATICO.
3. Conclusion
The EBITDA yield of ATICO is 149% yearly, EV/EBITDA = 0.67. Life mine of El Roble is 4y, and can be extended. La Plata is a very promissing deposite to be developped. Such EBITDA's ratio enable quick cash return that can be reinvested. They are my favorite investment type. If El Roble lifetime is prolonged to 2 or 3y more, ATICO might be a 5 to 10 bagger.
