Thread by @Edark94

$SRHI.v $SRHI #copper - Turnaround story or a final pump before bankruptcy?

Well friends, I've spent a lot of time reading up on this mess of a company and got some thoughts about it. Would love to have a dialogue about it, as I am by no means an expert.

So a quick overview of the companies goal until 2023.



They aim to produce 18500 t copper per year. Gross revenue would be $172M per year at todays price ($9300/t). For a $37 M fully diluted MC it isn't too shabby, even if they only own 70%.

The problem here is that they just barely managed to get out of bankruptcy. They were forced to sell 40% of its copper production at $2.89 per pound for 24 months ending July 2022, as seen below. This was done to secure capital for the development of their UG mine.

This sadly means that they are essentially selling 40% of their production at a loss, which will limit their cashflow for the upcoming years and make them vulnerable to any problems that could occur during development.

This explains their horrendous raise with a FULL warrant at 0.7, which means the short-term upside is limited. Quick math tells me they'll earn $12.9 M for the 9.24 M pounds #copper they can sell for spot price during 2021. Expect them to lose money until 2023.

After 2023 they will hopefully reach full capacity. While their assets are relatively small, they do have a large land package they could drill in for further upside. But sadly it seems they can't afford to drill here until then.

My opinion is that despite of these problems, it still is a rather attractive play on #copper. It is incredibly risky and could easily go bankrupt, but if copper prices continue to rise I have a hard time seeing that being the case. I'm going to get a starter position today.