erschienen bei Seeking Alpha, von Peter Arendas
- Ecora Resources is transitioning to become a "green" royalty and streaming company, focusing on copper, cobalt, and nickel.
- The company's cornerstone asset is the Kestrel coking coal mine, which is expected to cease production in 2026.
- Even without Kestrel, the portfolio is robust enough to be generating revenues of around $100 million in 4-5 years.
- At the current metals prices, Ecora offers a conservative 250% upside potential.
Over the recent quarters, Ecora's share price declined by 50%. The main reason is worsened financial results due to the declining Kestrel royalty contributions, as well as temporarily lower production at the Voisey's Bay mine. The recent lows touched the $1 level. And although the share price bounced back up above $1.1, it is hard to say whether the bearish trend is over, as the technical indicators don't indicate any trend reversal. The $1 level may be re-tested again soon. On the other hand, if the share price starts growing, the next more meaningful resistance should be met only in the $1.6 area.
Although the end of the Kestrel royalty contributions and the whole transition to green assets may cause some near-term pain, the long-term prospects of the company are very good, due to the quality assets included in its portfolio. Even after the Kestrel royalty stops generating cash flows (probably in 2026), Ecora has the potential to reach annual revenues of around $100 million over the next 4-5 years. Of course, if the current metals prices prevail, and there are no major negative surprises, especially at the development-stage assets. At revenues of $100 million, it is reasonable to expect Ecora's market capitalization to approach the $1 billion level. It means a nearly 250% upside at the current share count.