National Bank On Copper

NBCFM Research | Thematic Research
January 8, 2023
INDUSTRY RATING
Base Metals - Year Ahead Thematic
Diversified Metals & Mining:
Overweight Key Themes Impacting Copper Markets in 2023
(NBF Economics & Strategy Group)
Near-Term Copper Demand Aligned with Global Economy

Copper prices were volatile throughout 2022 and soft demand outlook to start the year coinciding
with additional supply coming online creates some uncertainty for the near-term price outlook. That
said, NBF forecasts are for a tighter market balance in 2023 than Consensus owing to anticipated
production shortfalls from ongoing ramp-up of projects in development; however, we continue to
project significant market surplus in 2024/2025 providing some headwinds to prices.
Market Pricing in Favourable Long-Term Fundamentals

Long-term fundamentals for copper remain attractive given the lack of advanced-stage projects
in the pipeline to meet rising long-term demand as copper remains a critical component to
decarbonizing and the greening of the global economy. Current equity valuations suggest the market
is looking through near-term volatility and pricing in this favourable long-term outlook.
Consensus Estimates Not Adequately Accounting for Cost Inflation/Industry Headwinds

Inflationary pressures, localized labour shortages and persistent supply chain disruptions will
continue to impact operations throughout 2023. We analyze NBF Estimates relative to Consensus
and outline a few producers, including FM, LUN, ERO and TKO where guidance could include some
disappointing estimates relative to Consensus in the coming weeks.
Market Conditions Supportive of Continued Consolidation

The lack of robust copper growth pipelines for industry majors and the current valuation gap
between Senior and Junior peers remain supportive of continued consolidation. Recent transactions
have been taking place at premium multiples suggesting the market for high-quality copper growth
remains competitive. We highlight CMMC, FIL and SLS as acquisition targets and pending a favourable
resolution at Cobre-Panama, FM has a portfolio that would be attractive to global diversified
company looking to bolster its copper pipeline.
Top Producer Pick Remains TECK/B, Top Developer: FIL with CS Offering Positive Long-
Term Potential:
TECK/B ($65.00 TP, OP): Transformational growth in the copper unit, and a strong balance sheet
capable of advancing its robust project pipeline without sacrificing supplemental shareholder returns
all support Teck as our top pick.
CS ($6.50 TP, OP): While 2023 is impacted by copper forward sales and continued transition of the
Research: NBCFM Base Metals portfolio through development of Mantoverde, we believe CS will be the copper name the market
● ResearchBaseMetals@nbc.ca pivots to under an improved macroeconomic backdrop given several transformational projects in the
pipeline and a management team in place to deliver its stated growth objectives.
Analyst Shane Nagle, CFA
(416) 869-7936 ● shane.nagle@nbc.ca FIL ($35.00 TP, OP): Expect drilling to accelerate as the South American summer warms up, allowing
Analyst Rabi Nizami, P.Geo drill rigs to safely fan out and resume blockbuster expansion step-outs as seen last in H1/22.
(416) 869-7925 ● rabi.nizami@nbc.ca
With more conviction on the outlook for copper prices, we'd look to TKO, CMMC and HBM and remain
Analyst Lola Aganga, M.Eng. cautious on outlook for ERO and LUN given stage and magnitude of development projects amidst the
(416) 869-6516 ● lola.aganga@nbc.ca
current inflationary environment.
Associate Adam Smiarowski, PhD
(416) 869-7535 ● adam.smiarowski@nbc.ca
Associate Sameer Keswani, MBA For required disclosures, please refer to the end of the document.
(416) 869-8029 ● sameer.keswani@nbc.ca
Thematic Research
NBCFM Research | January 8, 2023
Summary: Top Pick Remains TECK/B; CS Well Positioned for Re-Rating; FIL
Exploration Program Set to Unlock Value
Figure 1: Summary of Base Metal Coverage Target/Ratings
Ticker Analyst Price (C$) Rating Target (C$)
Current Previous Current Previous
Adventus Mining ADZN.V Nizami $0.57 OP OP $0.90 $0.80
Altius Minerals Corp. ALS.TO Nagle $22.39 OP OP $26.50 $26.50
Arizona Metals Corp. AMC.TO Nizami $4.30 OP OP $7.00 $7.00
Bravo Mining Corp. BRVO.V Aganga $2.14 OP OP $2.65 $2.50
Capstone Copper Corp. CS.TO Nagle $5.49 OP SP $6.50 $5.50
Copper Mountain Mining Corp. CMMC.TO Nagle $1.91 OP OP $2.25 $2.75
Ero Copper Corp. ERO.TO Nagle $20.09 SP SP $20.00 $17.50
Filo Mining Corp. FIL.TO Nizami $27.83 OP OP $35.00 $30.00
First Quantum Minerals Ltd FM.TO Nagle $29.84 SP SP $30.00 $30.00
Foran Mining Corp. FOM.V Nizami $3.09 OP OP $3.75 $3.30
Hudbay Minerals Inc. HBM.TO Nagle $7.48 SP SP $8.50 $7.50
Lundin Mining Corp. LUN.TO Nagle $9.15 SP SP $9.25 $8.25
Sherritt International Corp. S.TO Nagle $0.57 SP SP $0.75 $0.80
Solaris Resources Inc. SLS.TO Nagle $6.66 OP OP $12.50 $14.00
Taseko Mines Ltd. TKO.TO Nagle $2.23 SP SP $2.40 $1.90
Teck Resources Ltd. TECKb.TO Nagle $52.99 OP OP $65.00 $56.00
Trilogy Metals Corp. TMQ.TO Nizami $0.75 SP SP $1.00 $1.15
Source: NBF Estimates, Company Reports
Revised Commodity Price Assumptions:
- We are maintaining our methodology for base metal price assumptions reflecting spot through
to the end of 2024, then trending towards our long-term price assumptions by 2027 (was 2026)
based on the 90th to 95th percentile of the AISC curve and/or incentive price analysis for all
major commodities (see Figure 18).
Demand Uncertainty Causing Short-Term Volatility:
- In the short term, copper demand is very much aligned with the trajectory of the global
economy. We continue to see volatility in prices given the uncertain picture for 2023 based on
growing recessionary fears, escalation of COVID-19 infection rates in China and persistently
elevated interest rates given the commitment of governments globally in battling inflation.
- NBF forecasts are for a tighter market balance in 2023 than Consensus owing to anticipated
production shortfalls from ongoing ramp-up of projects in development; however, we continue
to project significant market surplus in 2024/2025 providing some headwinds to prices.
Market Focused on Favourable Long-Term Fundamentals:
- Long-term copper fundamentals remain favourable as an anticipated shortfall in supply is

expected to coincide with improved demand tied to the Global energy transition. We
conservatively project a 5.6 mln tonne supply deficit within the next 10 years (by 2033), after
accounting for Brownfield expansion projects, reserve expansion from higher quality operations
and a conservative demand growth outlook.
- NBF Base Metal coverage is currently implying a copper price of US$3.51/lb or 90% of spot for
producers and US$2.45/lb or 63% of spot for developers. The implied copper price is the highest
relative to spot prices over the past few years suggesting the market is willing to look through
near-term demand uncertainty and growing supply to favourable long-term outlook for
commodities and copper in particular.
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Thematic Research
Consensus Not Adequately Accounting for Cost Pressures/Operating Headwinds:
- While several contracts are moderating to begin 2023, consumable prices remain elevated, and
lack of labour availability persists in several locations. We’ve accounted for higher operating
and capital costs throughout our coverage (seeing greater pressures on Greenfield capital
projects). As a result, we anticipate some potentially negative guidance revisions in the coming
weeks given persistent inflation, labour shortages, deferred spending from 2022 and higher
copper prices to start the year may provide additional development capital to deploy. Overall,
we see some risks on guidance updates from: First Quantum (updated three-year operating cost
guidance), Lundin Mining (operational performance at Candelaria/Neves-Corvo and
commitment to Josemaria development), Ero Copper (elevated operating/capital costs in 2023)
and Taseko (given persistent grade dilution at Gibraltar and detailed project update pending at
Florence).
Market Primed for Continued Consolidation:

- The lack of robust copper growth pipelines for industry majors and the current valuation gap
between Senior/Intermediates and Junior/Developers remain supportive of continued
consolidation in the copper industry. Recent transactions have taken place at premium
multiples suggesting the market for high-quality copper growth remains competitive. Potential
acquisition targets in our coverage include Copper Mountain, Filo Mining, Solaris Resources and
pending a favourable resolution at Cobre-Panama, First Quantum.
Top Producer Pick: Teck Resources (TECK/B: TSX; $65.00 Target, Outperform).
Our Outperform rating is supported by transformational growth in the copper business as the company
continues to advance several copper development projects within its pipeline. The ramp-up of QB2 in 2023
to drive near-term copper/FCF growth is the company’s key deliverable for the year. Teck's balance sheet
is capable of weathering a volatile commodity price environment without sacrificing near-term growth
objectives and continuing to support supplemental shareholder distributions. With China opening up
imports of coking coal from Australia, we would anticipate a rebalancing of Teck's customer base and see
fundamental support for steelmaking coal markets/pricing.
Upgrading Capstone Mining (CS: TSX, $6.50 Target, Outperform) Given Positive Long-Term Growth
Outlook
We are upgrading to Outperform given our positive long-term growth outlook for the company. The
integration plan for its Chilean operations have been openly discussed since the acquisition of the Mantos
asset and we continue to see additional expansion opportunities and potential cost savings through its
district integration plan. Despite near-term headwinds related to inflationary pressures and copper
forward sales in place on 32% of 2023 sales at US$3.56/lb, we believe CS will be the copper name the
market pivots to under an improved macroeconomic backdrop given several transformational projects in
the pipeline and a management team in place to deliver its stated growth objectives. Please see our
accompanying note for further information.
Top Developer Pick: Filo Mining (FIL: TSX, $35.00 Target, Outperform)
Our Outperform rating is driven by an expectation for drilling to accelerate as the South American summer
warms up, allowing drill rigs to safely fan out and resume blockbuster expansion step-outs, as was last
seen in H1/22. We expect the 40-km drill program to illustrate further 'blue-sky' potential of the land
package, both within the high-grade feeder zone and to the north and south, as the mineralization limits
at the property are nowhere near being defined. The strike of the Filo-Los Helados trend which falls within
Filo’s claims spans ~9 km, whereas the oxide resource (2019) spanned only ~3.5 km at shallow depths.
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Thematic Research
Subsequent drilling to date has demonstrated sulfide mineralization over five-kilometre strike and over
one-kilometre depth, all still open.
Valuation Analysis Suggests Taseko, Copper Mountain and Hudbay Minerals are additional names to
own with higher conviction on copper price appreciation. Additionally, with Greenfield project
development impacting near-term FCF generation and premium valuations, we remain cautious on Ero
Copper and Lundin Mining.
Figure 2: Summary of NBF Investment Thesis

Company 2023 Investment Thesis Highlights
- Our Outperform rating considers the discounted P/NAV valuation and the attractive economics of the high-grade (>5%) Curipamba project, for which project financing has been completed
and final permitting is underway. We assume construction can begin in 2023 after community consultation and final approval of the ESIA and related permits, and completion of detailed
Adventus Mining
engineering for a revised capex figure. The company also has a prospective large-scale porphyry drill target at Santiago (~1 km long drill holes planned) and has a stake in a portfolio of
exploration properties for which we ascribe minimal value at this time.
- Our Outperform rating is supported by the company’s stable, long-life asset base, transitioning of the portfolio towards lower carbon intensive commodities and leveraging its in-house
Altius Minerals Corp. expertise to provide long-term exposure to future exploration success. While we see some risks to near-term commodity prices, long-term fundamentals remain supportive and the company
has an established track record of investing throughout the commodity cycle and we see several opportunities to surface value from its portfolio in 2023.
- Our Outperform rating considers our expectation that the Kay target can support a sizeable high grade maiden resource and a standalone underground mining project. Our rating is further
supported our expectation for ongoing drilling catalysts over the next ~18 months from the fully funded >150 km m drill program (~85km remaining). The trend which hosts Kay has been
Arizona Metals Corp.
mapped over >10 km (vs. ~350 m drilled) and two other targets (“Central” and “West”) are high priority for the greatest chance of delivering another discovery which could drive our
valuation higher.
- Our Outperform rating is based on the potential of Luanga’s large-scale resource and attractive project economics, partially offset by the company's tightly held share structure. We
Bravo Mining Corp. ascribe a Speculative risk rating given the company’s status as an exploration/development company, where several de-risking initiatives including funding and development milestones are
to be achieved prior to generating positive FCF.
- We are upgrading to Outperform given our positive long-term growth outlook for the company. The integration plan for its Chilean operations have been openly discussed since the
acquisition of the Mantos asset and we continue to see additional expansion opportunities and potential cost savings through its district integration plan. Despite near-term headwinds
Capstone Mining
related to inflationary pressures and potential copper price volatility, we believe CS will be the copper name the market pivots to under an improved macroeconomic backdrop given several
transformational growth projects in the pipeline and a management team in place to deliver its stated growth objectives.
- Our Outperform rating considers the improved balance sheet post-Eva sale and a large, scalable resource in Canada. Following an operationally challenging 2022, we expect the Street will
Copper Mountain be looking for an improvement in operations before ascribing value to the company's near-term growth catalysts; however, the Copper Mountain Mine remains a potential tuck-in acquisition
for an intermediate copper producer.
- Our Sector Perform rating takes into account Ero’s declining grade profile and premium valuation offset by incremental exploration potential, near-term expansion opportunities and low
Ero Copper operating costs. The recent shift in strategy towards developing Tucumã and mine expansion at Caraíba deteriorates the near-term FCF outlook and brings development/ inflation risks in
the current environment - while we don't forecast any significant liquidty constraints, positive development updates and exploration results will be key to a re-rating throughout 2023.
- Our Outperform rating is driven by an expectation for the pace of drilling to accelerate during the South American summer, resuming blockbuster expansion step-out drilling as seen last in
Filo Mining H1/22. We expect the program to illustrate further 'blue-sky' potential of the land package both within the high-grade feeder zone and to the north as the resource limits at the property
(>9 km strike) are nowhere near being defined.
- Our Sector Perform rating stems from ongoing uncertainty in negotiations with the Panamá Government as well as recent share price appreciation and premium valuation. The company's
First Quantum balance sheet remains in a strong position to weather a prolonged period of volatile copper prices while continuing to deliver organic growth; however, a prolonged period without
contributions from Cobre Panamá would deteriorate FCF sufficiently enough to impact growth initiatives across the company's portfolio.
Our Outperform thesis factors in de-risking elements of the Canadian jurisdiction and strong financial backing from OTPP and Sprott, and further includes an expectation for future
exploration success. The company has a multitude of exploration targets across its land package which require drilling. These include: near-mine targets such as Tesla, which is adjacent to
Foran Mining
McIlvenna Bay, and would require minimal infrastructure to be added to the mine plan, and regional targets such as Bigstone/Marconi and many others, which, if proven, would require
trucking to centralized mill facilities at McIlvenna Bay.
- Our Sector Perform rating considers the company's long-term growth outlook offset by currently elevated leverage. While the market will remain reluctant to reward names with high
Hudbay Minerals capex projects in a period of depressed copper prices, the company's prudent plan in advancing Copper World, continued ramp-up at New Britannia and transition to higher grades at
Pampacancha will support near-term FCF growth and with an improved copper price environment sipportive of a re-rating.
- Our Sector Perform rating stems from the advancement of Josemaria, which adds significant development uncertainty and deteriorates near-term FCF generation. Additionally, there
Lundin Mining remains significant uncertainty on the adoption of elevated royalties in Chile where Candelaria represents ~50% of the company's project NAV and the fiscal stability agreement expires at
the end of 2023 — leaving LUN exposed to any proposed changes.
- Our Sector Perform rating accounts for Sherritt's targeted exposure to Nickel and Cobalt improving the outlook for cash distributions from the Moa JV in the near term offset by the
Sherritt Intl.
company's ongoing debt commitments and need for further clarity on anticipated growth initiatives at Moa.
Our Outperform rating is based on Warintza’s large-scale, near-surface resource, attractive project economics and management’s track record for generating shareholder value. Our
valuation methodology of 0.70x NAV is derived from the quality of exploration results to date with multiple expansion likely to stem from the project advancing through feasibility.
Solaris Resources Inc.
Precedent acquisition multiples in the base metal developer space have taken place as high as 0.8x - 1.0x with higher multiples ascribed to more advanced projects within stable
jurisdictions.
- Our Sector Perform Rating accounting for Taseko’s growth opportunities with the Florence project (as well as other development projects in the portfolio) offset by currently elevated
Taseko Mines leverage and cash costs. Given the high leverage on the Balance Sheet, uncertainty in Florence project costs and timeline, more clarity will need to be provided to the market before
acribing more value to these growth objectives.
- Our Outperform rating is supported by transformational growth in the copper business as the company continues to advance several copper development projects within its pipeline. Teck's
balance sheet is capable of weathering a volatile commodity price environment without sacrificing near-term growth objectives and continuing to support supplemental shareholder
Teck Resources
distributions. With China opening up imports of coking coal from Australia, we would anticipate a rebalancing of Teck's customer base and see fundamental support for steelmaking coal
markets/pricing.
Our Sector Perform thesis acknowledges multiple positives such as the high-grade economics of the UKMP Project, exploration potential of the surrounding land package, support from
indigenous partners (NANA), and a strategic 50/50 JV partnership with South 32 which lowers financing risk and ultimately positions the company for acquisition. Nevertheless, the
Trilogy Metals
advancement timeline is on hold while Federal authorities reassess a previously approved Environmental Assessment Statement and right-of-way agreement, on which we'll look for clarity
with filing of the Draft SEIS in Q2/23.
Source: NBF Estimates
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Thematic Research
1 – Demand Uncertainty Causing Short-Term Price Volatility

Copper prices went through severe price swings during 2022, peaking around US$4.80/lb in April on supply
concerns, dropping below US$3.30/lb in Q3 largely on inflation/recessionary fears, and rebounding to
~US$3.80/lb to end the year as relaxation in China’s zero-COVID policy improved near-term demand
prospects. In the short term, copper demand is very much aligned with the trajectory of the global economy.
We continue to see volatility in prices given the uncertain demand picture for 2023 based on growing
recessionary fears, escalation of COVID-19 infection rates in China and persistently elevated interest
rates given the commitment of governments globally in battling inflation.
On the supply side, 2022 copper markets were highlighted by low inventories and tightly balanced markets
which were supportive of prices. As new supply from mines and projects comes to the market over the next
few years, this will push the market into surplus – NBF forecasts for 2023 are for a tighter market balance
than Consensus owing to anticipated production shortfalls from ongoing ramp-up of projects like: QB2,
potential disruptions related to elections in Peru, contract negotiations throughout Chile and potential for
further government intervention (similar to the proposed shutdown of Cobre-Panama and ongoing dispute at
Tenke-Fungurume). The growth in supply is expected to materialize by H2/23, coinciding with a potential
rebound in the Chinese economy assuming the country’s health care system is capable of coping with
increase in COVID cases without materially impacting its manufacturing sector.
Figure 3: Annual Copper Surplus/Deficit Compared to Copper Price – Tighter Market Now Anticipated in 2023
with Excess Supply Projected in 2024/2025
Supply Surplus Supply Deficit Nominal Copper Price (US$/lb)

1,250 $5.00
1,000 938 2022 PEAK $4.50
750 $4.00
550 568 564
Copper Price (US/lb)

500 471 $3.50
94
Copper (kt)
250 156 192 112 92 168 90 13 28 $3.00

124
(67)
0 $2.50
(17)
(95)
(250) (205) 2016 LOW $2.00
(251) (275) (259) (203)
(500) $1.50
(750) $1.00
(1,000) Prolonged surplus from 2011-2016 $0.50

(1032)
(1,250) $0.00
2003
2020
2002
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2021
2022
2023
2024
2025
Source: NBF Estimates, Refinitiv, Bloomberg
In the past, prolonged excess supply has resulted in significant price declines, such as the near 50% drop
from 2011-2016 as supply exceeded demand for multiple years. Our midterm forecast is to have a similar
multi-year excess supply with a number of projects ramping up production in the next two to three years
representing one of the largest mine supply growth periods over the past decade.
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Thematic Research
Following the announcement of easing COVID-related restrictions throughout China in Q4/22, data from the
CFTC indicates that money managers have switched to a net long position as demand prospects improved.
We get the sense that money managers are also looking ahead to far more favourable long-term
fundamentals in copper markets related to the lack of sufficient long-term supply growth.
While a deteriorating demand picture, potential for inflationary pressures to decrease consumption and
smooth ramp-up of new copper supply throughout the year provide some headwinds to copper markets,
China’s orderly exit from COVID-related restrictions, improved global stimulus measures into H2/23 and the
global energy shortage potentially accelerating grid spending are all near-term tailwinds for copper prices
throughout the year.
Figure 4: Managed Money CFTC Contracts Highlight Shift in Market Sentiment as Outright Long Positions
Accelerated Towards the End of 2022
000' Contracts
200,000 Managed Money Long Managed Money Short Managed Money Net
150,000
100,000
50,000
-50,000
-100,000
-150,000
Source: Commodity Futures Trading Commission, NBF
2 – Markets Pricing in Favourable Long-Term Fundamentals

Long-term copper fundamentals remain favourable as an anticipated shortfall in supply is expected to
coincide with improved demand tied to the Global energy transition, where copper is needed in renewable
power generation, build-out of the electrical grid and construction of electric vehicles (EVs). Copper remains
key to decarbonization and the greening of the economy, and this trend is likely to support copper
consumption.
Within the EV sector, investments are being made in copper foil plants in Eastern Europe as well as Spain, to
cater to demand from the EV battery manufacturers in the region. The current energy crisis in Europe has
accelerated the energy transition trend driven by decarbonization targets that are being complemented with
dedicated climate-related funding under the Multiannual Financial Framework 2021-2027 and the
NextGenerationEU (NGEU) disbursements. Driven by efforts to decouple Europe’s energy needs from Russian
fossil fuels before 2030, the European Commission has formulated the REPowerEU plan. Before 2027, the
plan has targets that relate to industrial decarbonization, new legislation towards faster permitting for
renewables, increased energy savings targets, regulatory measures to increase energy efficiency in the
transport sector and proposals to ensure that the industry has access to critical raw materials, among others.
The increased focus on renewable energy sources and green initiatives should support higher utilization
levels at existing semis capacity in the region while also spurring fresh investments, especially at low-cost
destinations.
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Thematic Research
Following additional supply growth in the pipeline for 2023-2025, mine supply is then likely to contract due
to declining grades, reserve depletion and producers deferring the sanctioning of new projects given the
current inflationary environment and recession conditions, which might accentuate the supply deficit post
2026.
We conservatively project a 5.6 mln tonne supply deficit within the next 10 years (by 2033), after accounting
for Brownfield expansion projects, reserve expansion from higher quality operations and on the supply side
account for more conservative adaptation of green energy policies given the potential for bureaucratic
delays in green energy policies. In order to incentivize Greenfield copper projects and generate the 5.6 mln
tonnes of new production needed by 2033, copper prices will need to exceed US$3.50/lb. This incentive
price analysis accounts for expected easing of cost inflation pressure and in our view adopts somewhat more
conservative assumptions than Consensus forecasts owing to extension of existing production from high-
quality operations which are not yet sanctioned, more conservative demand assumptions and increased
conversion of resources to reserves owing to higher copper prices. Incentive prices could be driven higher by
increasing the implied risk-adjusted rate of return, improved demand outlook as well as persistent
inflationary pressures/delays on new Greenfield development projects.
Figure 5: Long-Term Incentive Price Analysis. Left side shows demand for refined copper against
Base Case mine output, contribution from expanded Brownfield production and the projected
supply gap post 2026. Right side shows incentive price for 5.6 mln tonnes of Greenfield
projects to achieve a 15% risk-adjusted IRR
Base Case Mine Output Brownfield Contributions
Demand For Mine Output
30 Long-term incentive price
$6.00 required to meet demand over
Risk Adjusted Project Incentive Price (US$/lb Cu)
Demand for refined metal from

mine output expected to grow by next 10 years (in 2022$)
28
~1.8% annually over next 10 years
$5.00
~5.6 Mt of new
26 production capacity
required from
greenfield projects $4.00
US$3.50/lb
Copper (Mt)
24
$3.00
22
20 $2.00
Projected Supply
Incentive price curve
from Base Case Mines
for greenfield
18 $1.00 projects, assuming
15% required risk-
adjusted rate of return 5.6 Mt
16
$0.00
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Cumulative Paid Copper Production (kt)
Source: NBF Estimates, Wood Mackenzie
Over the long term, further upside in copper prices exists from more stringent environmental regulations on
new development projects. As a result, there is a risk that the project pipeline is not developed sufficiently
to meet primary demand beyond the next few years. Continued growth in adoption of EVs, increasing
penetration of renewables in the energy mix and a focus on sustainable building construction all offer
improved demand from more copper-intensive green energy sectors.
On the downside, long-term demand for copper could be hampered by deglobalization and geopolitical
tension leading to lower economic growth. In developed countries, wages have not kept pace with inflation,
leading to an increased cost of living. In the event of sustained lower economic growth, resistance to higher-
cost decarbonization (fossil fuel to renewables, EV) will be slower than anticipated. In particular, EV
demand has been supported by government policies, via regulations and financial incentives, which could
evaporate as politicians respond to a financially stressed electorate intolerant of supporting carbon taxes on
fossil fuels, higher taxes to subsidize EV sales (generally seen as a luxury good) and to fund the required
infrastructure build-out. At the best of times, governments are poor long-term planners; stagflation and
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Thematic Research
sustained high interest rates will cause debt-laden governments to reconsider timing of policy while
politicians cognizant of the four-year election cycle may promise voters a slowing of the green transition.
This would reduce the end-use demand in the renewable energy space due to delays in the permitting
process, slower than expected adoption of EVs and initiatives to increase efficiency in transportation are put
on the back burner. Moreover, higher than forecast substitution and miniaturization/thrifting of copper in
end-use products could lead to lower demand. We have attempted to account for some of these demand-
related pressures under our Base Case; however, the market appears to be pricing in a more favourable
demand environment without considering these factors.
In Figure 6 below, NBF Base Metal coverage is currently implying a copper price of US$3.51/lb or 90% of
spot for producers and US$2.45/lb or 63% of spot for developers to achieve a multiple of 1.0x NAV. The
implied copper price is the highest relative to spot prices over the past few years suggesting the market
is willing to look through near-term demand uncertainty and growing supply to favourable long-term
outlook for commodities and copper in particular.
Figure 6: Implied Copper Price (at 1.0x NAV)

$4.50
Cu spot price of US$3.92/lb (as of Jan 6, 2023) $3.98

$4.00
$3.57 $3.59 $3.61
$3.47
$3.50 $3.31
$3.26 $3.29
$3.00 $2.82 $2.88
$2.50 $2.28 $2.30 $2.32

$2.11
CuEq, US$/lb
$2.00
$1.50
$1.00
$0.50
$0.00
Arizona
Taseko
Adventus
Trilogy
Minerals
Quantum
Foran Mining
Ero Copper
Filo Mining
Lundin
Capstone
Mountain
Resources
Resources
Metals
Mining
Hudbay
Metals
Mines
Copper
Copper
Mining
Solaris
First
Teck

CuEq values based off commodity prices of: US$3.91/lb Cu, US$13.09/lb Ni, US$1.38/lb Zn,
US$250/t HCC & US$1,868/oz Au
In Figure 7 below, we present P/NAV valuations with NAV implying a downside scenario of US$3.25/lb and
upside scenario of pricing in US$4.25/lb. Given the market is valuing long-term copper growth, discounting
our LOM cash flow models at a range of copper prices allows us to outline names that will appreciate under a
rising copper price environment with limited deterioration in market value should near-term price volatility
persist. The cheapest names under a downside scenario are Taseko, Capstone, Teck Resources and First
Quantum Minerals, with cheapest stocks under a higher copper price scenario including Taseko, Copper
Mountain, Capstone Copper and Hudbay Minerals.
While Taseko Mines screens favourably, we await confirmation with respect to ongoing grade dilution at
Gibraltar and a detailed capital cost breakdown and project update for Florence in the coming months.
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Thematic Research
Figure 7: Implied Share Return Based on P/NAV Implying US$4.25/lb Cu and US$3.25/lb Cu
6.00x
US$3.25/lb Base Case US$4.25/lb
5.00x
P/NAV (x)
4.00x
3.00x
2.00x
1.00x
0.00x
Taseko Mines Teck Resources Capstone Copper First Quantum Hudbay Minerals Lundin Mining Ero Copper Copper Mountain
Source: NBF Estimates, Refinitiv

CuEq values based off commodity prices of: US$3.91/lb Cu, US$13.09/lb Ni, US$1.38/lb Zn, US$250/t HCC & US$1,868/oz Au
3 – Consensus Not Accurately Reflecting Inflation and Other Operating Headwinds

Inflation had a significant impact on profitability of base metal mining companies in 2022; while supply
contracts and consumable prices are expected to stabilize throughout the year, some costs remain
elevated and labour availability in several regions remains challenged (primarily impacting Greenfield
development projects). Throughout late 2021 and H1/22, oil, steel and freight prices jumped to multi-year
highs, with global economic growth picking up pace from the impact of reopening after COVID-19, adding
additional pressures to supply chains, driving up transportation costs and tightening labour markets.
Although the absolute price levels still remain elevated, the pace of increase has started to taper in Q4/22
vs. H1/22.
In Figure 8, we highlight CPI, WTI oil and steel prices to illustrate where inflation has impacted consumable
prices.
Figure 8: Measures of Inflation – Consumer Price Index, WTI Crude Oil and Hot Rolled Steel
10.0 500%
9.0
400%
% Change Relative to January 1, 2020
8.0
7.0 300%
Consumer Price Index
6.0
200%
5.0
100%
4.0
3.0 0%
2.0
-100%
1.0
0.0 -200%
01/20 03/20 05/20 07/20 09/20 11/20 01/21 03/21 05/21 07/21 09/21 11/21 01/22 03/22 05/22 07/22 09/22 11/22 01/23
CPI Urban Consumers WTI Crude Oil Hot Rolled Coil Steel Baltic Dry Index
Source: NBF, Bloomberg
Figure 9 compares trends of cost of goods sold between Consensus and NBF Estimates for base metal
producers in our coverage universe. Generally, we see that consensus estimates in future years show an
easing of cost pressures experienced during 2022. In terms of operating costs, we see the potential for
negative guidance updates relative to Consensus for First Quantum. With respect to capital costs (not
shown below) inflationary pressures are expected to persist into 2023 with risks to Ero Copper, Lundin
Mining and Taseko.
9
Thematic Research
Figure 9: Cost Trend Analysis (2022 – 2025)

Consensus NBF Commentary
- Lower sulphuric acid prices take effect in 2023 and Mantoverde sulphude expansion
Capstone Copper completed by 2024
60% Cu growth
- Operationally from 20222022
challenging to 2025 drives
leads economies
to improved of scale
grade profile in coming years
Copper Mountain - 30% higher grades expected during next few years
- Lower grade profile at Caraiba and higher labour costs take effect in 2023
Ero Copper - Low-cost Tucuma project comes online in 2024, ramps up in 2025
- Persistent lower grades impart Kansanshi costs in 2023
First Quantum - Higher prices coal/power costs in Panama take effect in 2024
- Pampacancha ore improves grade profile beginning in Q4/22
Hudbay Minerals - We continue to carry elevated costs in Manitoba in-line with 2022
- Higherby-product zinc production from Neves-Corvo to take effect in 2023
Lundin Mining - Grade profile expected to improve at Cadelaria beginning in 2023
- Declining fertilizer prices offer less by-product revenue beginning in 2023
Sherritt International - Moa grade profile impacted by mine operations prepping for expansion work
- Improved throughput, grades & recovery lower costs beginning in 2023
Taseko Mines - We model Florence (low-cost in-situ production) inital production in 2025
- QB2 ramps-up in 2023, becoming Teck's biggest copper producer in 2024
Teck Resources
Source: NBF Estimates, Bloomberg
4 – Market Conditions Primed for Further Consolidation

Near-term price volatility and favourable long-term fundamentals create a market environment where
operators will continue to shop for opportunities to add long-term copper growth to their portfolios at
attractive valuations.
Given the relatively escalated capital intensity of new development projects and current inflationary
pressures and labour shortages, development remains more ideal for larger, more diversified companies with
stronger balance sheets. What is unique in the current market is the lack of a project pipeline for several
of these industry majors.
Figure 10: Breakdown of Copper Project Ownership Highlights the Cupboard Is Rather Bare for Industry Majors
12
11
Global Diversified Seniors Intermediates & Juniors
10
9 8
8
7 6 6
6 5
5 4 4 4
4 3 3 3 3 3 3 3
3 2 2 2 2 2 2
2 1 1 1 1 1
1
0
Glencore
KGHM
Boliden
BHP Group
Teck
MMG
Ero Copper
First Quantum
Antofagasta
Vale
Anglo-American
Nornickel
Nexa Resources
Kaz Minerals
Copper Mountain
Rio Tinto
Freeport-McMoran
Codelco
Southern Copper
Capstone Mining
Hudbay Minerals
Lundin Mining
Sandfire Resources
Taseko Mines
Atalaya Mining
Greenfield Brownfield
With current volatile markets, headwinds to advancing new development projects, we believe the conditions
are ideal for further consolidation within the industry. Precedent transactions in late 2022 (Rio Tinto’s
acquisition of Turquoise Hill and BHP’s acquisition of Oz Minerals) took place at premium valuations
suggesting the market for high-quality copper growth remains competitive.
Even with respect to development projects, we have seen several favourable valuations for transactions
related to partial asset sales (including a copper stream on Florence to Mitsui and sale of the Eva project to
Harmony Gold). Precedent transactions in the past year have taken place at average P/NAV of 1.4x NAV
for producing assets (implying a +US$4.00/lb copper price) and 0.95x for development projects relative
to historical multiples of 1.05x for producers and 0.75x for development assets over the past decade.
10
P/NAV P/NAV
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
First Quantum > Inmet
Cupric Canyon > Hana Mining
Capstone > Pinto Valley (BHP)
Lundin > Eagle Mine (RIO)
China Moly > Northparkes (80%) (RIO)
PanAust > Frieda River Project (GLEN)
Shanxi Donghui > Inova Resources
HudBay > Augusta
Zhongjin Lingnan > Perilya
First Quantum > Lumina
Lundin > Candelaria (80%) (FCX)
Taseko > Curis
Antofagasta > Zaldivar (50%) (ABX)
Antofagasta > Duluth
NovaCopper > Sunward Audley Cap > Anglo Norte (AAL)
Goldcorp > El Morro (30%) (NG) Sumitomo > Morenci (13%) (FCX)
Nevsun > Reservoir Boliden > Kevitsa (FM)
Teck > AQM (70%) China Molybdenum > Tenke (56%) (FCX)
Source: NBF, Company Reports, Capital IQ

Source: NBF, Company Reports, Capital IQ
Desert Star > Kutcho (CS) PT AMI > PTNNT (49%) (NEM)
Teck > San Nicolas (21%) (GC) BHR > Tenke (24%) (LUN)
First Quantum > Minera Panama (10%) (LS… Trevali > Rosh Pinah & Perkoa (GLEN)
Copper Mountain > Altona OZ Minerals > Avanco
Mitsubishi > Quellaveco (21.9%) (AAL) Zijin > Nevsun
South32 > Arizona Mining (83%) PT-FI > Grasberg (51%) (RIO & FCX)
Newmont > Galore (50%) (NG) Sumitomo > Quebrada Blanca II (30%) (TECK)
KAZ Minerals > Baimskaya (75%) (Aristus) China Molybdenum > Tenke (24%) (BHR…
HudBay > Mason Resources Newcrest > Red Chris (70%) (III)
HudBay > Rosemont (7.95%) (UCM) Lundin > Chapada (YRI)
NEXA > Karmin Mitsubishi Materials > Mantoverde (30%)
South32 > Ambler (50%) (TMQ) Nova > KAZ
11
Zijin Mining > Tibet Julong (50.1%) POSCO > Ravensthorpe (30%) (FM)
China Molybdenum > Kisanfu (95%) (FCX) Sandfire > MATSA (Trafigura & Mubadala)
Capstone > Santo Domingo (30%) (KORES) Santa Cruz > Bolivian Assets (GLEN)
Lundin > Josemaria South32 > Sierra Gorda (45%) (Sumitomo)
Wyloo > Noront
Figure 11: Precedent Copper Producer Acquisitions Over the Past Decade
Sibanye > Santa Rita & Serrote (Appian)

Figure 12: Precedent Copper Developer Acquisitions Over the Past Decade
Stanmix > Kun-Manie (AMC) Evolution > Ernest Henry (GLEN)

Agnico > San Nicolás (50%) (TECK) Capstone > Mantos Copper
Glencore > MARA (18.75%)(NEM)
MTAL > CSA Copper Mine (GLEN)
Harmony > Eva (CMMC)
Rio Tinto > Turquoise Hill (49%)
SolGold > Cornerstone
BHP > OZ Minerals
-
-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
EV/ CuEQ Resource (US$/lb) EV/ CuEQ Resource (US$/lb)

Thematic Research
Thematic Research
Currently, Senior producers have maintained an elevated P/NAV multiple relative to more leveraged junior
producers and developers. Should this multiple gap persist, we would expect to see increased consolidation
throughout the sector and more torque to rising commodity prices longer term by switching into juniors
given the valuation re-rating potential.
Figure 13: Historical Base Metal Valuation Progression

Intermediate Base Metal Producers Junior Base Metal Producers Copper Price - US$/lb
1.20x $5.00
$4.50
1.00x
$4.00
$3.50
Copper Price, US$/lb

0.80x
P/NAV Multiple
$3.00
0.60x $2.50
$2.00
0.40x
$1.50
$1.00
0.20x
$0.50
0.00x $0.00
Figure 14: EV/CF Progression of Base Metal Producers (Based on Consensus)

14.00x $5.00
$4.50
12.00x
$4.00
10.00x $3.50
Copper Price, US$/lb

$3.00
EV/CF Multiple
8.00x
$2.50
6.00x
$2.00
4.00x $1.50
$1.00
2.00x
$0.50
Senior/Intermediate Producers Junior Producers Copper Price - US$/lb
0.00x $-
Source: NBF Estimates, Bloomberg, Refinitiv
The lack of robust copper growth pipelines for industry majors and the current valuation gap between
Senior/Intermediates and Junior/Developers remains supportive of continued consolidation. Potential
acquisition targets in our coverage include 1) large-scale development projects like Filo Mining and
Solaris Resources, 2) single-asset companies with underinvested assets that are scalable and located in
a tier 1 jurisdiction (Copper Mountain) and 3) pending a successful resolution to current negotiations
with the Panama Government, First Quantum has a large-scale copper business with organic growth
opportunities that would be attractive to a Global Diversified company looking to expand its copper
business.
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Thematic Research
5 – Sensitivity Analysis
We provide EV/CF multiples for producers at various copper prices (US$3.25/lb, US$3.75/lb and US$4.25/lb)
in Figure 15 below. At US$3.75/lb, Senior/Intermediate equities are trading at 6.7x EV/2023E CF and Junior
producers are trading at 4.8x EV/2023E CF.
Figure 15: EV/2023E CF Sensitivity Analysis at Various Copper Prices
14.0x
US$3.25/lb US$3.75/lb US$4.25/lb
12.0x
EV/2023E CF (x)
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
Copper Mountain Hudbay Minerals Lundin Mining Teck Resources Ero Copper First Quantum Taseko Mines Capstone Copper

We present 2022 FCF yields across our coverage universe (excluding spending on Greenfield development
projects) to highlight FCF generation and the impact of adopting more volatile copper prices (US$3.25/lb,
US$3.75/lb and US$4.25/lb).
Figure 16: 2023E FCF yields (excluding Greenfield growth projects) at Various Copper Prices
25%
US$3.25/lb US$3.75/lb US$4.25/lb
20%
2023E Free Cash Flow Yield (%)
15%
10%
5%
0%
-5%
-10%
Lundin Mining Copper Mountain Teck Resources First Quantum Hudbay Minerals Taseko Mines Ero Copper Capstone Copper

FCF yield calculated based on EV
Capstone Copper excludes Mantoverde, Ero Copper excludes Tucuma, Hudbay Minerals excludes Copper World, Lundin Mining excludes
Josemaria, Teck Resources excludes QB2, Taseko Mines excludes Florence
13
Thematic Research
Figure 17: Base Metal Comparables

P/NAV EV/2022E CF EV/2023E CF
S.TO 0.35x TECKb.TO 4.1x S.TO 2.9x

SLS.TO 0.40x
TMQ.TO 0.43x LUN.TO 4.9x CMMC.TO 3.0x
ADZN.V 0.44x
HBM.TO 6.8x HBM.TO 3.9x
AMC.TO 0.45x
FIL.TO 0.60x FM.TO 7.3x LUN.TO 4.0x
TKO.TO 0.64x
FOM.V 0.73x S.TO 8.4x TECKb.TO 5.4x
CS.TO 0.77x ERO.TO 9.2x TKO.TO 6.0x
HBM.TO 0.90x
CMMC.TO 1.01x CS.TO 13.6x FM.TO 6.6x
ALS.TO 1.03x
ALS.TO 14.7x ERO.TO 7.0x
FM.TO 1.06x
LUN.TO 1.08x TKO.TO 17.8x CS.TO 9.4x
TECKb.TO 1.11x
ERO.TO CMMC.TO 22.9x ALS.TO 17.8x
1.20x
0.00x 0.50x 1.00x 1.50x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 0.0x 5.0x 10.0x 15.0x 20.0x
NAV Sensitivity to 10% Δ in Cu Price NAV Sensitivity to 10% Δ in Pb + Zn Price NAV Sensitivity to 10% Δ in Au + Ag Price
CMMC.TO 77.1% LUN.TO 7.5% CMMC.TO 18.9%

TKO.TO 48.4% LUN.TO 7.7%
CS.TO 38.0% FOM.V 7.4%
AMC.TO 6.0%
HBM.TO 37.9%
AMC.TO 5.4% FOM.V 3.5%
LUN.TO 37.7%
ERO.TO 33.5% TMQ.TO 3.2% SLS.TO 3.4%
FM.TO 26.1% TKO.TO 3.2%
ADZN.V 2.9%
SLS.TO 16.5% ERO.TO 2.9%
FIL.TO 14.4% HBM.TO 1.8% ADZN.V 2.3%
TECKb.TO 13.0%
TECKb.TO 1.2% TMQ.TO 2.0%
FOM.V 10.5%
AMC.TO FM.TO 1.7%
7.2% CS.TO 0.4%
ADZN.V 7.0% TECKb.TO 1.6%
ALS.TO 2.5% FM.TO 0.0% CS.TO 1.4%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 0.0% 5.0% 10.0% 0.0% 5.0% 10.0% 15.0% 20.0%
14
Thematic Research
APPENDIX: Revised Metal Price Assumptions, Major Model Revisions, Upcoming

Catalysts and Target Multiples
Figure 18: Revised Metal Price Assumptions
Q4/22A 2023E 2024E 2025E 2026E LT
Copper (US$/lb) Current $3.64 $3.80 $3.80 $3.65 $3.65 $3.50

Previous $3.40 $3.40 $3.50 $3.60 $3.50 $3.50
Change ↑ ↑ ↑ ↑ ↑ -
Nickel (US$/lb) Current $11.61 $13.75 $13.75 $12.00 $12.00 $8.50

Previous $10.00 $10.00 $9.00 $9.00 $8.00 $8.00
Change ↑ ↑ ↑ ↑ ↑ ↑
Zinc (US$/lb) Current $1.35 $1.35 $1.35 $1.25 $1.25 $1.15

Previous $1.35 $1.35 $1.25 $1.25 $1.15 $1.15
Change - - ↑ - ↑ -
Lead (US$/lb) Current $0.95 $0.90 $0.90 $0.90 $0.90 $0.85

Previous $0.90 $0.90 $0.85 $0.85 $0.85 $0.85
Change ↑ - ↑ ↑ ↑ -
Cobalt (US$/lb) Current $23.50 $23.00 $23.00 $20.00 $20.00 $20.00

Previous $27.50 $27.50 $27.50 $25.00 $20.00 $20.00
Change ↓ ↓ ↓ ↓ - -
Molybdenum (US$/lb) Current $20.92 $30.00 $30.00 $20.00 $20.00 $15.00

Previous $18.00 $18.00 $15.00 $12.00 $10.00 $10.00
Change ↑ ↑ ↑ ↑ ↑ ↑
Hard Coking Coal (US$/t) Current $287.09 $275.00 $275.00 $200.00 $200.00 $175.00
Previous $275.00 $250.00 $250.00 $175.00 $150.00 $150.00
Change ↑ ↑ ↑ ↑ ↑ ↑
Iron Ore (62% ) (US$/t) Current $97.93 $110.00 $110.00 $95.00 $95.00 $90.00
Previous $95.00 $95.00 $95.00 $95.00 $90.00 $90.00
Change ↑ ↑ ↑ - ↑ -
Potash (C$/t) Current $934.93 $900.00 $900.00 $650.00 $600.00 $600.00

Previous $966.23 $905.84 $899.23 $743.85 $743.85 $595.08
Change ↓ ↓ ↑ ↓ ↓ ↑
15
Thematic Research
Figure 19: Major Model Revisions

Company Major Model Changes
- Reduced corporate tax rate to 20% from 25%, following formal signing of Investment Contract
Adventus Mining - Increased equity financing assumption price to C$0.50/sh from C$0.40/sh to reflect recent 20 day VWAP
- We continue to assume development capex of US$275mln which is higher than the FS.
Altius Minerals - No change aside from commodity price update
Arizona Metals - No change aside from commodity price update
Bravo Mining - No change aside from commodity price update
Capstone Mining - Lowered discount rate on Mantoverde & Mantos Blancos to 9% (was 10%) given advanced stage of development and improved outlook for revised tax/royalty rates in Chile
- Incorporated net proceeds from Eva sale of US$129 mln in Q4/22 and corresponding debt repurchase of US$87 mln in Q1/23
- Adopted more conservative operating assumptions in Q4/22 due to ongoing ramp-up to nameplate mill throughput and associated downtime related to a ransomware attack
Copper Mountain
late in the year
- We model throughput of 40,000 tpd (was 45,000 tpd) through H1/23 to account for opperational challenges to date in acheiving nameplate capacity
- Updated the company's credit facility to US$150 mln with expiration in December 2026 which we assume is partially drawn in H1/24
Ero Copper - we have also incorporated detailed operating assumptions from filing of the updated Strategic Mine plan at Caraiba (including incremental production from Inferred O/P and
U/G resources)
Filo Mining - We increased our equity financing assumption to be better aligned with recent share price trading ranges.
- As we await further details on Cobre-Panama tax/royalty negotiations, we have eliminated future tax-loss carry forwards, account for a 12%-16% sliding scale profit based
First Quantum royalty, a 25% corporate tax rate and minimum annual commitment of US$375 mln to the Panama Government. As a result, we have reduced our discount rate to 9% (was 10%)
and will reduce furtehr once we have clarity on potential of any shutdowns related to ongoing negotiations.
- We factored in the recently announced Sprott debt financing, paired with the Ontario Teachers financing which are set to close in ~Q1/23
Foran Mining - Raised our target multiple to reflect de-risking of the financing arrangement.
- Increased future equity issuance price assumption to be better aligned with recent share price trading ranges.
Hudbay Minerals - Increased capital cost assumption for Copper World to US$2.5 bln (was US$2.1 bln) to reflect current inflationary environment
- Increased initial capital cost estimate of Josemaria to US$6.5 bln (was US$4.4 bln) given ongoing inflationary pressures and precedent development projects in the region.
Lundin Mining
- Lowered discount rate at Candelaria to 9% (was 10%) given improvement in Chilean tax/royalty discussions
Sherritt Intl. - Incorporated aggregate repurchase of $90 mln in face value of Secured Second Lien and Junior Notes in Q4/22
- Increased Warintza initial capital costs to US$3.0 bln (was US$2.5 bln) and continue to model 60% debt funding, precious metal stream and US$500 mln of equity to fund
development
Solaris Resources
- Increased ongoing operating and sustaining cost assumptions by ~20% to reflect recent inflationary pressures
- Increased equity financing assumption to $6.00/share (was $5.50/share)
- Incorporated US$50 mln for a 2.67% copper stream at Florence

Taseko Mines - Incorporated pre-released Q4/22 copper production/sales
- We continue to model a 5 year extension to existing debt maturities (was 10 years)
- Incorporated 50% expansion of QB by 2027 for US$3.5 bln

Teck Resources - Incorporated San Nicolas initial production by H2/26
- Reduced Andacollo discount rate to 9% (was 10%) given improvement in Chilean tax/royalty discussions
Trilogy Metals - Adjusted our equity financing share price assumptions to be better aligned with recent trading ranges.
16
Thematic Research
Figure 20: Base Metals Catalyst Calendar

- Receipt of full ESIA permits after following new community consultation procedure Q2/23
Adventus Mining - Potential start of full construction Q2/23
- Exploration updates/potential discovery at Pijili/Santiago TBD
- Completion of Phase 2 drilling (8.6km remaining) and ramping up Phase 3 (76km). 2023
Arizona Metals - Initial assay results from Central pad drilling; looking for another VMS discovery similar to Kay. Q1/23
- Begin drilling from Western pads. H1/23
- Completion of 975 MW of renewable energy projects under 59% equity stake held in ARR H1/23
Altius Minerals - Initial production from lithium operations and monetizing Lithium Royalty Corp. 2023
- Exploration efforts from LUN Saúva discovery and potential expansion initiatives at Chapada 2023
- Commencing Phase 2 of the proposed work program of re-assaying ~50 km of historic core 2023
Bravo Mining - Luanga Maiden Resource and PEA expected 2023
- Potential new targets discovered following expected exploration success TBD
- PV4 PFS Study and Paste Backfill/Dry Stack Tailings Facility Q1/23
Capstone Mining - Mantos Blancos Concentrator Debottlenecking ramp-up/ MB Phase II expansion Engineering Study H1/23
- Completion of Mantoverde Development Project Q4/23
- Production and cost guidance Q1/23
Copper Mountain - Grade improvements, increased throughput at Copper Mountain mine 2023
- Mine expansion implementation plans TBD
- Tucumã and Xavantina mineral reserve and resource updates H1/23
Ero Copper - Pilar 3.0 and Tucumã construction updates H1/23
- Caraíba nickel exploration assay results TBD
- Filo del Sol Analyst Site Tour Jan 17 2023 Jan 2023
Filo Mining - Exploration drilling (40km planned); Looking to expand Aurora Zone during summer program (H1) H1/23
- Potential partnership/funding agreement for Filo del Sol; or updates on nearby Josemaria TBD
- Cobre Panama royalty dispute update Q1/23

First Quantum - Nickel production ramp-up at Enterprise H2/23
- Development project update at Kansanshi, Las Cruces, Taca Taca Q4/23
- Close of project financing with Ontario Teachers and Sprott Q1/23

Foran Mining - Planned start of full construction, after receipt of full permits Q2/23
- 35km exploration drill program: focus on McIlvenna/Tesla, Bigstone and regional targets. 2023
- Copper World pre-feasibility study release & bulk sampling program H1/23
Hudbay Minerals - Exploration update from Manitoba, Manitoba tailings reprocessing opportunities 2023
- Technical improvements (ore sorting, recovery uplift programs) in Peru 2023
- Ramp up of Neves-Corvo ZEP H1/23

Lundin Mining - Maiden Mineral Resource estimate for Saúva H1/23
- Josemaria Technical Report H2/23
- Q4/22 operational results and 2023 guidance Q1/23
Sherritt International - Update on Moa JV growth plans and updated technical report Q1/23
- Ongoing debt repurchases TBD
- 2023 operating guidance at Gibraltar Q1/23
Taseko Mines - Expected receipt of final Underground Injection Control Permit, start of construction at Florence H2/23
- Update on Yellowhead permitting/community outreach/strategic alternatives TBD
- QB2 ramp-up to double Teck copper production; QB Mill Expansion Feasibility Study 2023
Teck Resources - Supplemental distribution (dividend/sharebuyback) announcement after Fort Hills sale closes Q1/23
- San Nicolás JV Feasibility Study Q1/24
- Draft SEIS for the Ambler Access Road Q2/23
Trilogy Metals - Final EIS and possible reinstatement of Record of Decision for the Ambler Access Road Q4/23
- Results from 2022 summer exploration drill results from Arctic and Sunshine/Bornite 2023
Source: NBF Estimates, Company Reports
17
Thematic Research
Figure 21: Revisions to Price Targets and Valuation Methodologies

Ticker Analyst Rating Target NAVPS Target Derivation Methodology
(C$) (C$)
Adventus Mining ADZN.V Nizami Current OP $0.90 $1.29 0.70x NAV

Previous OP $0.80 $1.11 Unchanged
Change - ↑ ↑
Altius Minerals Corp. ALS.TO Nagle Current OP $26.50 $21.67 1.40x NAV (50%); 20.0x EV/2023 CF (25%); 20.0x EV/2024 CF (25%)
Change - - ↓
Arizona Metals AMC.TO Nizami Current OP $7.00 $9.60 0.70x NAV

Change - - ↓
Bravo Mining BRVO.V Aganga Current OP $2.65 $2.84 0.85x NAV

Previous OP $2.50 $2.88 0.75x NAV
Change - ↑ ↓
Capstone Copper Corp. CS.TO Nagle Current OP $6.50 $7.17 0.85x NAV (50%); 6.5x EV/2024 CF (50%)
Previous SP $5.50 $6.45 Unchanged
Change ↑ ↑ ↑
Copper Mountain Mining Corp. CMMC.TO Nagle Current OP $2.25 $1.89 0.85x NAV (50%); 5.0x EV/2023 CF (25%); 5.0x EV/2024 CF (25%)
Change - ↓ ↓
Ero Copper Corp. ERO.TO Nagle Current SP $20.00 $16.77 0.90x NAV (50%); 6.5x EV/2024 CF (50%)
Previous SP $17.50 $15.27 0.90x NAV (50%); 6.5x EV/2023 CF (25%); 6.5x EV/2024 CF (25%)
Change - ↑ ↑
Filo Mining Corp. FIL.TO Nizami Current OP $35.00 $46.40 0.70x NAV
Change - ↑ ↑
First Quantum Minerals Ltd FM.TO Nagle Current SP $30.00 $28.02 1.10x NAV (50%); 6.0x EV/2023 CF (25%); 6.0x EV/2024 CF (25%)
Change - - ↑
Foran Mining Corp. FOM.V Nizami Current OP $3.75 $4.26 0.80x NAV
Previous OP $3.30 $4.55 0.70x NAV
Change - ↑ ↓
Hudbay Minerals Inc. HBM.TO Nagle Current SP $8.50 $8.29 0.85x NAV (50%); 5.0x EV/2023 CF (25%); 5.0x EV/2024 CF (25%)
Change - ↑ ↓
Lundin Mining Corp. LUN.TO Nagle Current SP $9.25 $8.47 0.85x NAV (50%); 5.0x EV/2023 CF (25%); 5.0x EV/2024 CF (25%)
Change - ↑ ↓
Sherritt International Corp. S.TO Nagle Current SP $0.75 $1.62 0.65x NAV
Change - ↓ ↑
Solaris Resources Inc. SLS.TO Nagle Current OP $12.50 $16.63 0.70x NAV
Change - ↓ ↓
Taseko Mines Ltd. TKO.TO Nagle Current SP $2.40 $3.46 0.85x NAV (50%); 5.0x EV/2023 CF (25%); 5.0x EV/2024 CF (25%)
Previous SP $1.90 $3.45 0.80x NAV (50%); 5.0x EV/2023 CF (25%); 5.0x EV/2024 CF (25%)
Change - ↑ ↑
Teck Resources Ltd. TECKb.TO Nagle Current OP $65.00 $47.90 1.10x NAV (50%); 6.0x EV/2023 CF (25%); 6.0x EV/2024 CF (25%)
Change - ↑ ↑
Trilogy Metals Corp. TMQ.TO Nizami Current SP $1.00 $1.73 0.45x NAV
Change - ↓ ↓
18
Thematic Research
Figure 22: Revisions to 2022/2023/2024 EBITDA, EPS & CFPS Estimates for Producers
Ticker Analyst EBITDA, US$ mln EPS, US$ CFPS, US$
2022 2023 2024 2022 2023 2024 2022 2023 2024
Altius Minerals Corp. ALS.TO Nagle Current C$94 C$91 C$82 C$0.85 C$0.81 C$0.82 C$1.65 C$1.37 C$1.17
Previous C$94 C$87 C$78 C$0.85 C$0.74 C$0.74 C$1.65 C$1.30 C$1.10
Consensus C$91 C$72 C$62 C$0.84 C$0.69 C$0.60 C$1.60 C$1.17 C$0.85
Capstone Copper Corp. CS.TO Nagle Current $514 $443 $738 $0.11 $0.16 $0.46 $0.35 $0.51 $0.93
Previous $483 $329 $596 $0.07 $0.06 $0.32 $0.31 $0.40 $0.77
Consensus $368 $487 $1,020 $0.12 $0.25 $0.64 $0.30 $0.60 $1.15
Copper Mountain Mining Corp. CMMC.TO Nagle Current C$33 C$189 C$174 C$(0.11) C$0.41 C$0.36 C$0.12 C$0.92 C$0.84
Previous C$44 C$165 C$150 C$(0.06) C$0.29 C$0.25 C$0.17 C$0.80 C$0.73
Consensus C$27 C$150 C$145 C$(0.13) C$0.22 C$0.23 C$0.13 C$0.61 C$0.61
Ero Copper Corp. ERO.TO Nagle Current $208 $265 $354 $1.08 $1.48 $2.23 $1.79 $2.35 $3.24
Previous $200 $209 $302 $1.00 $0.95 $1.64 $1.72 $1.88 $2.81
Consensus $190 $213 $390 $0.91 $1.14 $2.29 $1.70 $1.99 $3.45
First Quantum Minerals Ltd FM.TO Nagle Current $3,452 $3,651 $4,122 $1.61 $1.55 $2.28 $3.86 $4.24 $4.80
Previous $3,361 $3,003 $3,350 $1.49 $1.15 $1.87 $3.74 $3.83 $4.37
Consensus $3,283 $3,058 $3,649 $1.44 $1.11 $1.55 $3.71 $3.37 $3.56
Hudbay Minerals Inc. HBM.TO Nagle Current $469 $801 $868 $0.00 $0.72 $0.77 $1.46 $2.56 $2.55
Previous $459 $622 $681 ($0.02) $0.38 $0.43 $1.44 $2.21 $2.20
Consensus $531 $723 $836 $0.18 $0.64 $0.93 $1.63 $2.36 $2.58
Lundin Mining Corp. LUN.TO Nagle Current $1,292 $1,482 $1,565 $0.59 $0.77 $0.82 $1.34 $1.64 $1.76
Previous $1,178 $1,094 $1,235 $0.46 $0.38 $0.50 $1.20 $1.20 $1.40
Consensus $1,187 $1,245 $1,468 $0.50 $0.54 $0.62 $1.27 $1.24 $1.38
Sherritt International Corp. S.TO Nagle Current C$259 C$340 C$350 C$0.27 C$0.40 C$0.43 C$0.14 C$0.40 C$0.51
Taseko Mines Ltd. TKO.TO Nagle Current C$94 C$181 C$204 C$(0.03) C$0.14 C$0.19 C$0.21 C$0.61 C$0.56
Teck Resources Ltd. TECKb.TO Nagle Current C$9,849 C$8,709 C$9,777 C$9.35 C$7.68 C$10.13 C$15.41 C$11.64 C$15.33
Previous C$9,940 C$7,378 C$8,370 C$9.49 C$5.87 C$8.13 C$15.49 C$9.68 C$13.41
Consensus C$9,489 C$7,129 C$7,236 C$9.56 C$5.94 C$6.04 C$15.17 C$10.29 C$10.94
19
Thematic Research
Disclosures
PRICE, RATING AND TARGET HISTORY: I = Initiation, OP = Outperform, SP = Sector Perform, UP = Underperform, UR = Under Review, R = Restricted; T = Tender (Source: Factset, NBF)
Adventus Mining Corporation Rating History as of 01/06/2023

I:OP:$1.65 R:NM OP:$1.65 OP:$1.70 OP:$1.65 OP:$1.55 OP:$1.60 R:NM OP:$1.60 OP:$1.40 OP:$1.10
06/18/2020 07/28/2020 08/14/2020 05/19/2021 09/09/2021 10/26/2021 01/11/2022 01/19/2022 01/26/2022 04/07/2022 06/12/2022
1.80
1.60
1.40
1.20
1.00
Price (CAD)
0.80
0.60
0.40
0.20
Apr 20 Jul 20 Oct 20 Jan 21 Apr 21 Jul 21 Oct 21 Jan 22 Apr 22 Jul 22 Oct 22 Jan 23
OP:$1.00 OP:$0.80
07/05/2022 10/12/2022
Closing Price
Altius Minerals Corporation Rating History as of 01/06/2023

I:OP:$26.50
12/14/2022
30
25
20
Price (CAD)
15
10
5
Closing Price
Arizona Metals Corp. Rating History as of 01/06/2023

I:OP:$7.25 OP:$7.00
08/15/2022 10/12/2022
8
7
6
5
4
Price (CAD)
3
2
1
0
Closing Price
20
Thematic Research
Bravo Mining Corp. Rating History as of 01/06/2023

I:OP:$2.50
08/10/2022
2.40
2.20
2.00
1.80
Price (CAD)
1.60
1.40
1.20
Closing Price
Capstone Copper Corp. Rating History as of 01/06/2023

SP:$1.10 SP:$0.45 SP:$0.60 OP:$1.40 OP:$1.55 OP:$1.70 OP:$1.80 OP:$2.10 OP:$3.25 OP:$3.35 OP:$4.50 OP:$5.65
01/23/2020 03/26/2020 04/23/2020 07/20/2020 08/25/2020 09/16/2020 10/28/2020 10/28/2020 01/05/2021 02/02/2021 02/24/2021 04/08/2021
8
7
6
5
4
Price (CAD)
3
2
1
0
OP:$6.25 OP:$7.75 OP:$7.00 OP:$7.50 OP:$8.25 OP:$8.00 SP:$8.00 SP:$7.25 SP:$4.50 SP:$4.00 SP:$4.75 SP:$4.50
04/28/2021 05/19/2021 07/15/2021 10/21/2021 01/11/2022 02/02/2022 04/18/2022 05/13/2022 07/05/2022 07/18/2022 10/12/2022 10/31/2022
SP:$5.50
11/20/2022
Closing Price
Copper Mountain Mining Corporation Rating History as of 01/06/2023

SP:$1.00 SP:$1.10 SP:$0.40 SP:$0.70 SP:$0.90 SP:$1.50 R:NM SP:$1.65 SP:$2.30 SP:$3.00 OP:$3.25 OP:$4.50
01/13/2020 02/18/2020 03/26/2020 04/27/2020 07/29/2020 11/02/2020 11/09/2020 11/26/2020 01/05/2021 02/02/2021 02/16/2021 04/08/2021
5
3
Price (CAD)
0
OP:$4.75 OP:$5.50 OP:$5.25 OP:$5.00 OP:$5.25 OP:$4.75 OP:$4.50 OP:$4.75 OP:$4.50 OP:$2.75 SP:$2.25 OP:$3.25
04/26/2021 05/19/2021 07/15/2021 09/09/2021 10/21/2021 01/11/2022 02/02/2022 03/03/2022 04/18/2022 07/05/2022 07/18/2022 10/06/2022
OP:$2.75
11/09/2022
Closing Price
21
Thematic Research
Ero Copper Corp. Rating History as of 01/06/2023

SP:$21.50 SP:$14.75 SP:$15.25 SP:$16.00 SP:$19.50 SP:$20.50 SP:$25.00 SP:$24.00 SP:$26.00 SP:$27.50 SP:$30.00 SP:$21.00
03/12/2020 03/26/2020 04/22/2020 05/08/2020 08/06/2020 11/05/2020 11/24/2020 12/01/2020 04/08/2021 05/05/2021 05/19/2021 01/11/2022
30
25
20
Price (CAD)
15
10
5
SP:$19.50 SP:$20.50 SP:$21.50 SP:$16.50 SP:$16.00 SP:$17.50
02/02/2022 03/09/2022 04/07/2022 07/05/2022 07/18/2022 10/12/2022
Closing Price
Filo Mining Corp. Rating History as of 01/06/2023

OP:$4.00 SP:$2.25 R:NM SP:$3.00 SP:$3.50 OP:$3.50 OP:$4.50 OP:$6.00 OP:$12.75 OP:$13.00 OP:$16.00 OP:$22.50
02/20/2020 03/26/2020 07/30/2020 07/30/2020 10/23/2020 01/12/2021 04/08/2021 05/13/2021 05/17/2021 05/19/2021 01/11/2022 01/20/2022
30
25
20
15
Price (CAD)
10
5
0
OP:$25.00 OP:$35.00 OP:$30.00
04/07/2022 06/12/2022 07/05/2022
Closing Price
First Quantum Minerals Ltd. Rating History as of 01/06/2023

SP:$12.75 OP:$16.00 OP:$11.50 OP:$16.25 OP:$18.50 OP:$19.00 OP:$28.50 NA OP:$28.50 OP:$29.00 OP:$32.00 OP:$35.00
01/09/2020 02/14/2020 03/24/2020 07/28/2020 09/15/2020 10/29/2020 01/05/2021 01/29/2021 02/02/2021 02/17/2021 04/08/2021 04/28/2021
50
40
30
Price (CAD)
20
10
0
OP:$40.00 OP:$38.50 OP:$37.50 OP:$36.50 OP:$37.00 OP:$40.00 OP:$48.00 OP:$46.00 OP:$35.00 OP:$32.50 OP:$32.00 OP:$30.00
05/19/2021 07/15/2021 07/28/2021 09/09/2021 10/21/2021 01/11/2022 04/07/2022 04/27/2022 07/05/2022 07/18/2022 10/12/2022 10/26/2022
SP:$30.00
12/15/2022
Closing Price
22
Thematic Research
Foran Mining Corporation Rating History as of 01/06/2023

I:SP:$3.25 OP:$3.50 OP:$3.30
12/08/2021 06/12/2022 07/05/2022
3.50
3.00
2.50
2.00
1.50
Price (CAD)
1.00
0.50
0.00
Closing Price
Hudbay Minerals Inc. Rating History as of 01/06/2023

SP:$4.75 SP:$3.00 SP:$4.00 SP:$4.25 SP:$5.25 SP:$5.75 SP:$6.75 SP:$7.00 SP:$11.00 SP:$11.50 SP:$12.50 SP:$13.00
03/20/2020 03/26/2020 05/07/2020 05/15/2020 08/11/2020 08/12/2020 10/13/2020 11/03/2020 01/05/2021 02/19/2021 04/08/2021 05/19/2021
12
10
8
6
Price (CAD)
4
2
0
SP:$14.00 OP:$12.50 OP:$13.00 OP:$12.50 OP:$11.50 OP:$8.50 SP:$7.75 SP:$7.50
07/15/2021 09/09/2021 04/07/2022 04/18/2022 05/10/2022 07/05/2022 07/18/2022 10/12/2022
Closing Price
Lundin Mining Corporation Rating History as of 01/06/2023

OP:$9.25 OP:$9.50 OP:$7.50 OP:$7.75 OP:$8.50 OP:$9.75 SP:$10.25 SP:$13.50 SP:$15.50 SP:$16.25 SP:$17.00 SP:$15.50
01/23/2020 03/16/2020 03/26/2020 04/21/2020 07/29/2020 09/28/2020 11/30/2020 01/05/2021 02/19/2021 04/08/2021 05/19/2021 07/29/2021
18
16
14
12
10
Price (CAD)
8
6
4
SP:$14.00 SP:$13.00 SP:$12.25 SP:$14.00 SP:$9.50 SP:$9.00 SP:$8.50 SP:$8.25
09/09/2021 10/21/2021 11/23/2021 04/07/2022 07/05/2022 07/28/2022 10/12/2022 10/26/2022
Closing Price
23
Thematic Research
Sherritt International Corporation Rating History as of 01/06/2023

SP:$0.30 R:NM SP:$0.30 SP:$0.35 SP:$0.50 SP:$0.60 SP:$0.65 SP:$0.60 SP:$0.55 SP:$0.65 SP:$1.00
01/22/2020 02/26/2020 08/31/2020 11/04/2020 01/05/2021 02/02/2021 04/08/2021 05/19/2021 09/09/2021 02/10/2022 03/10/2022
1.00
0.80
0.60
Price (CAD)
0.40
0.20
0.00
SP:$1.10 SP:$0.75 SP:$0.60 SP:$0.70 SP:$0.80
04/07/2022 07/05/2022 07/18/2022 07/28/2022 10/20/2022
Closing Price
Solaris Resources Inc. Rating History as of 01/06/2023

I:OP:$20.00 OP:$22.00 OP:$16.00 OP:$14.00
04/13/2022 04/14/2022 07/05/2022 10/12/2022
20
15
10
Price (CAD)
5
0
Closing Price
Taseko Mines Limited Rating History as of 01/06/2023

SP:$0.90 SP:$1.00 SP:$0.40 SP:$0.60 SP:$0.95 SP:$1.15 SP:$1.75 R:NM SP:$1.75 SP:$2.00 SP:$2.65
01/09/2020 02/20/2020 03/26/2020 04/30/2020 08/04/2020 08/05/2020 10/26/2020 11/11/2020 11/17/2020 01/05/2021 02/25/2021
3.50
3.00
2.50
2.00
1.50
Price (CAD)
1.00
0.50
0.00
SP:$3.00 SP:$3.50 SP:$3.25 SP:$3.00 SP:$3.25 SP:$3.00 SP:$3.25 SP:$3.00 SP:$1.85 SP:$1.75 SP:$2.00
04/08/2021 05/19/2021 07/15/2021 08/05/2021 10/21/2021 02/02/2022 04/07/2022 05/05/2022 07/05/2022 07/18/2022 10/12/2022
SP:$1.90
11/04/2022
Closing Price
24
Thematic Research
Teck Resources Limited Rating History as of 01/06/2023

OP:$27.50 OP:$20.00 OP:$18.50 SP:$17.00 SP:$17.50 OP:$22.20 OP:$22.00 OP:$28.50 OP:$30.00 OP:$32.50 OP:$36.00 OP:$38.50
02/05/2020 03/24/2020 04/21/2020 07/20/2020 07/23/2020 09/27/2020 10/13/2020 01/05/2021 02/18/2021 04/28/2021 05/19/2021 07/15/2021
60
50
40
30
Price (CAD)
20
10
0
OP:$37.50 OP:$43.00 OP:$48.50 OP:$55.00 OP:$52.50 OP:$55.00 OP:$60.00 OP:$65.00 OP:$55.00 OP:$52.50 OP:$60.00 OP:$56.00
07/27/2021 09/09/2021 10/21/2021 01/11/2022 02/02/2022 02/24/2022 04/07/2022 04/18/2022 07/05/2022 07/27/2022 10/12/2022 10/27/2022
Closing Price
Trilogy Metals Inc. Rating History as of 01/06/2023

OP:$3.25 OP:$3.75 OP:$4.00 OP:$4.25 OP:$4.75 OP:$4.25 OP:$3.75 SP:$2.50 SP:$1.75 SP:$1.35 SP:$1.15
03/26/2020 08/20/2020 01/05/2021 04/08/2021 05/19/2021 09/09/2021 01/11/2022 02/23/2022 06/12/2022 07/05/2022 10/12/2022
4.00
3.50
3.00
2.50
2.00
Price (CAD)
1.50
1.00
0.50
Closing Price
RISKS:
ADZN
Exploration/Development Risk: Adventus’s ability to deliver exploration success sufficient to warrant future development opportunities at Curipamba, Pijili and Santiago is subject to many risks,
including the completion of viable feasibility studies, upgrading mineral resources, managing potential labour disruptions, receiving the proper permitting and obtaining adequate financing.
Commodity Risk: Adventus’s valuation is primarily levered to copper prices. Commodity prices are impacted by several external factors out of the company’s control, including interest rates, inflation
and supply/demand market fundamentals.
Variable Costs: Adventus is exposed to fluctuations in input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital costs
on the company’s development projects.
25
Thematic Research
ALS
Commodity Prices: Altius’ cash flow is levered to fluctuations in commodity prices. The company has a diversified commodity mix compared to other royalty companies which focus primarily on
precious metals. Specifically, revenue is derived from potash, copper, thermal coal, iron ore, renewable energy and other metals. Price movements in commodities are impacted by several external
factors out of the company’s control, including interest rates, inflation and supply and demand fundamentals.
Non-Operator: By not operating the assets within its royalty portfolio, Altius does not directly control the production or development of each asset. Any delays in the forecasted production schedule
could negatively impact revenue and indirectly impact the valuation of the company. There can be no assurance that third-party production forecasts can be met or that production disruptions including
temporary or permanent shutdowns can be avoided.
Financing and Dilution: In our model, Altius generates sufficient cash flow to cover current financial obligations. Management has stated it intends to fund future acquisitions with internally generated
cash flow and the available credit facility; however, there is no guarantee this will be sufficient to fund opportunities (including maintaining its majority interest in Altius Renewables) as they arise,
potentially leading to future equity and/or debt offerings
AMC
Commodity Risk: Arizona Metals’ valuation is levered to base and precious metal prices. Commodity prices are impacted by several external factors out of the company’s control, including interest
rates, inflation and supply/demand market fundamentals.
Exploration/Development Risk: Arizona Metals’ ability to deliver exploration success sufficient to warrant future development opportunities is subject to many risks, including the completion of viable
feasibility studies, defining and upgrading mineral resources, managing availability of labour, receiving the proper permitting and obtaining adequate financing.
Variable Costs: Arizona Metals is exposed to fluctuations in input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital
costs on the company’s development projects.
BRVO
Exploration/Development Risk: Bravo Mining’s ability to complete development work and deliver exploration success sufficient to warrant future expansion opportunities at Luanga is subject to
many risks and uncertainties, including the completion of viable feasibility studies, upgrading mineral resources and obtaining adequate financing to complete construction and further support the
underground project.
Commodity Risk: Bravo Mining’s valuation is primarily levered to long-term Palladium, Platinum and Gold prices. Commodity prices are impacted by several external factors out of the company’s
control, including interest rates, inflation and supply/demand fundamentals.
Variable Costs: Bravo Mining is exposed to fluctuations in input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital
costs on both the company’s operating and development projects.
CS
Development Risk: Capstone’s ability to successfully complete expansion opportunities at Cozamin and development of Santo Domingo are subject to many risks and uncertainties including the
completion of feasibility studies, obtaining/maintaining permits from local governments and obtaining adequate financing.
Commodity Risk: Capstone’s valuation is primarily levered to long-term copper prices. Commodity prices are impacted by several external factors out of the company’s control, including interest
rates, inflation and supply/demand fundamentals.
CMMC
Development Risk: A portion of CMMC’s valuation is derived from the New Ingerbelle deposit located 1 km away from the Copper Mountain Mine. Following a potential go-forward decision, risks
related to development or any further processing expansion will remain.
Financing & Liquidity Risk: CMMC has elevated debt outstanding (credit facility, various subordinated/term loans) and the ability to repay debt is dependent on the company’s ability to generate FCF.
CMMC’s cash flows are subject to fluctuations in copper prices and other relevant commodities (fuel).
Speculative Risk: We ascribe a Speculative risk rating given the company’s status as a single-asset company, where several de-risking initiatives including further exploration success, permitting,
funding and development milestones are to be achieved prior to achieving its growth initiatives. Its growth initiatives require additional funding given current project-level debt commitments at its
Copper Mountain mine as well as completion of detailed engineering/amendments to existing permits.
26
Thematic Research
ERO
Exploration/Development Risk: Ero Copper’s ability to successfully complete development work and deliver exploration success sufficient to warrant future expansion opportunities at its Caraíba
complex and Xavantina properties is subject to many risks and uncertainties, including upgrading mineral resources, updating the mine plan and obtaining adequate financing (if necessary).
Commodity Risk: Ero Copper’s valuation is primarily levered to long-term copper prices. Commodity prices are impacted by several external factors out of the company’s control, including interest
rates, inflation and supply/demand fundamentals.
Variable Costs: Ero Copper is exposed to fluctuations in input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital
costs on both the company’s operating and development projects.
FIL
Commodity Risk: Filo’s valuation is primarily levered to copper prices. Commodity prices are impacted by several external factors out of the company’s control, including interest rates, inflation and
supply/demand market fundamentals.
Exploration/Development Risk: Filo’s ability to deliver exploration success sufficient to warrant future development opportunities at Filo del Sol is subject to many risks, including the completion of
viable feasibility studies, upgrading mineral resources, managing potential labour disruptions, receiving the proper permitting and obtaining adequate financing.
Variable Costs: Filo is exposed to fluctuations in input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital costs on the
company’s development projects.
FM
Commodity Risk: First Quantum’s valuation is primarily exposed to fluctuations in copper prices. These prices are impacted by several external factors outside the company’s control, including
interest rates, inflation and supply/demand fundamentals.
Development risk: First Quantum’s ability to successfully complete its current expansion and development initiatives are subject to many risks and uncertainties.
Geopolitical: First Quantum’s portfolio includes several operations in Zambia, including Kansanshi, Sentinel and Enterprise, where the government has recently increased taxes and implemented
policies that could adversely affect the profitability of the projects.
FOM
Commodity Risk: Foran’s valuation is primarily levered to copper prices. Commodity prices are impacted by several external factors out of the company’s control, including interest rates, inflation and
Exploration/Development Risk: Foran’s ability to deliver exploration success sufficient to warrant future development opportunities at McIlvenna Bay is subject to many risks, including the completion
of viable feasibility studies, upgrading mineral resources, managing potential labour disruptions, receiving the proper permitting and obtaining adequate financing.
Variable Costs: Foran is exposed to fluctuations in input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital costs on
the company’s development projects.
HBM
Commodity Risk: Hudbay’s valuation is primarily levered to long-term metal prices especially copper, zinc and gold. Commodity prices are impacted by several external factors out of the company’s
control, including interest rates, inflation and supply/demand fundamentals.
Variable costs: Hudbay does not hedge input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital costs on both the
company’s operating and development projects.
Development risk: Hudbay relies on developing additional projects to maintain production growth. The ability to successfully complete a project is subject to many risks and uncertainties including the
completion of feasibility studies, mineral resource conversion, labour disputes and obtaining adequate financing.
27
Thematic Research
LUN
Commodity Risk: Lundin’s valuation is primarily levered to long-term copper, zinc and nickel prices. Commodity prices are impacted by several external factors out of the company’s control, including
interest rates, inflation and supply/demand fundamentals.
Currency Risk: Two of Lundin’s operations are currently based in Europe where revenue is generated by commodity prices (primarily in U.S. dollars) with costs largely incurred in Euros and Swedish
Krona. Additionally, the company’s primary operation, Candelaria is located in Chile, exposing the company to earnings volatility from fluctuations in exchange rates.
Development risk: Lundin’s ability to successfully complete expansion objectives across each of its operations is subject to uncertainties regarding the completion of optimization initiatives, obtaining/
maintaining permits from local governments, successful resource conversion and securing required financing.
Political Risk: A significant portion of Sherritt’s valuation is driven by operations in Cuba, where political risks remain heightened.
Financing & Liquidity Risk: S is levered and the ability to pay outstanding debt is subject to repayment risk from the company’s ability to generate FCF. Cuban government receivables remain
outstanding.
Commodity Prices: Sherritt’s cash flows are subject to fluctuations in copper and nickel prices, and other relevant commodities (oil, gas, fuel).
SLS
Commodity Risk: Solaris’s valuation is primarily levered to copper prices. Commodity prices are impacted by several external factors out of the company’s control, including interest rates, inflation and
Exploration/Development Risk: Solaris’s ability to deliver exploration success sufficient to warrant future development opportunities at Warintza is subject to many risks, including the completion of
viable feasibility studies, upgrading mineral resources, managing potential labour disruptions, receiving the proper permitting and obtaining adequate financing.
Variable Costs: Solaris is exposed to fluctuations in input costs, such as labour, fuel, consumable and power. Any increases in these variables could negatively impact operating and capital costs on
TKO / TGB
Development Risk: A portion of TKO’s valuation is tied to the Florence PTF, which employs a non-conventional method to mine copper and is currently in the testing phase.
Reserve Depletion: As with many mining companies, TKO relies on brownfield and greenfield exploration to increase reserves and sustain production levels.
Financing & Liquidity Risk: TKO is levered and the ability to pay the outstanding debt is subject to repayment risk from the company’s ability to generate FCF. TKO’s cash flows are subject to
fluctuations in copper prices (unhedged) and other relevant commodities (fuel).
Speculative Risk: We ascribe a Speculative risk rating given the company’s growth initiatives at Florence and Yellowhead require several de-risking initiatives including further exploration success,
permitting, funding and development milestones prior to being achieved.
TECK.B / TECK
Commodity Risk: Teck is a diversified resource company and depends on sales of primarily coal, copper, zinc and oil to generate its earnings. As such, Teck’s valuation remains indirectly exposed
to the pace of growth in China (the world’s largest copper importer) and global steel production (the primary use of metallurgical coal). Teck generally does not hedge its future production, leaving the
company exposed to price volatility.
Development Risk: Teck’s ability to successfully complete its expansion and development objectives is subject to many risks and uncertainties, including the completion of feasibility studies,
upgrading mineral resources and grade estimates and labour disputes.
28
Thematic Research
TMQ
Exploration/Development Risk: Trilogy’s ability to deliver exploration success sufficient to warrant future development opportunities at Arctic and Bornite are subject to many risks, including the
completion of viable feasibility studies, upgrading mineral resources, managing potential labour disruptions, receiving the proper permitting and obtaining adequate financing.
Commodity Risk: Trilogy’s valuation is primarily levered to copper prices. Commodity prices are impacted by several external factors out of the company’s control, including interest rates, inflation and
Variable Costs: Trilogy is exposed to fluctuations in input costs, such as labour, fuel, consumables and power. Any increases in these variables could negatively impact operating and capital costs on
ADDITIONAL COMPANY RELATED DISCLOSURES

Adventus Mining Corporation 2, 3, 4, 5, 7
Altius Minerals Corporation
Arizona Metals Corp.
Bravo Mining Corp. 156
Capstone Copper Corp. 2, 3, 5, 7, 183
Copper Mountain Mining Corporation
Ero Copper Corp. 10
Filo Mining Corp. 10
First Quantum Minerals Ltd. 163
Foran Mining Corporation
Hudbay Minerals Inc. 2, 3, 4, 5, 7, 181
Lundin Mining Corporation
Sherritt International Corporation 2, 3, 5, 7
Solaris Resources Inc.
Taseko Mines Limited 2, 3, 4, 5, 7
Teck Resources Limited
Trilogy Metals Inc.
LEGEND FOR COMPANY RELATED DISCLOSURES:
2 National Bank Financial Inc. has acted as an underwriter with respect to this issuer within the past 12 months.
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8 National Bank Financial Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services from this issuer in the next 3 months.
9 As of the end of the month immediately preceding the date of publication of this research report (or the end of the second most recent month if the publication date is less than 10 calendar days after
the end of the most recent month), National Bank Financial Inc. or an affiliate beneficially own 1% or more of any class of common equity securities of this issuer.
10 National Bank Financial Inc. makes a market in the securities of this issuer, at the time of this report publication.
11 A partner, director, officer or research analyst involved in the preparation of this report has, during the preceding 12 months provided services to this issuer for remuneration other than normal
course investment advisory or trade execution services.
12 A research analyst, associate or any other person (or a member of their household) directly involved in preparing this report has a financial interest in the securities of this issuer.
13 A partner, director, officer, employee or agent of National Bank Financial Inc., is an officer, director, employee of, or serves in any advisory capacity to the issuer.
14 A member of the Board of Directors of National Bank Financial Inc. is also a member of the Board of Directors or is an officer of this issuer.
15 A redacted draft version of this report has been shown to the issuer for fact checking purposes and changes may have been made to the report before publication.
156 An NBF analyst attended a site visit of the Luanga project in Para State, Brazil on August 15 & 16, 2022. A portion of the expenses was incurred by the issuer.
163 An NBF analyst attended a site visit to the Cobre Panama project in Donoso, Colon Province, Panama on September 14, 2022. A portion of the analyst's travel expenses was paid for by the
issuer.
181 An NBF analyst attended a site visit to the Copper World project near Tucson, Arizona on October 18, 2022. A portion of the analyst's travel expenses was paid for by the issuer.
183 An NBF analyst attended a site visit to Mantos Blancos, Mantoverde and Santo Domingo in Chile November 15-17, 2022. A portion of the analyst's travel expenses was paid for by the issuer.
29
Thematic Research
RATING DISTRIBUTION
Outperform Sector Perform Underperform
Coverage Universe Ratings Distribution 64% 34% 0%
Investment Banking Distribution 62% 57% 50%
DISCLOSURES
Ratings And What They Mean: PRIMARY STOCK RATING: NBF has a three-tiered rating system that is relative to the coverage universe of the particular analyst. Here is a brief description of
each: Outperform (OP) – The stock is expected to outperform the analyst’s coverage universe over the next 12 months; Sector Perform (SP) – The stock is projected to perform in line with the sector
over the next 12 months; Underperform (UP) – The stock is expected to underperform the sector over the next 12 months. SECONDARY STOCK RATING: Under Review (UR) − Our analyst has
withdrawn the rating because of insufficient information and is awaiting more information and/or clarification; Tender (T) − Our analyst is recommending that investors tender to a specific offering for
the company’s stock; Restricted (R) − Because of ongoing investment banking transactions or because of other circumstances, NBF policy and/or laws or regulations preclude our analyst from rating
a company’s stock. INDUSTRY RATING: NBF has an Industry Weighting system that reflects the view of our Economics & Strategy Group, using its sector rotation strategy. The three-tiered system
rates industries as Overweight, Market Weight and Underweight, depending on the sector’s projected performance against broader market averages over the next 12 months. RISK RATING: As of
June 30, 2020, National Bank Financial discontinued its Below Average, Average and Above Average risk ratings. We continue to use the Speculative risk rating which reflects higher financial and/or
operational risk.
GENERAL: This Report was prepared by National Bank Financial Inc. (NBF), a Canadian investment dealer, a dealer member of IIROC and an indirect wholly owned subsidiary of National Bank of
Canada. National Bank of Canada is a public company listed on the Toronto Stock Exchange.
The particulars contained herein were obtained from sources which we believe to be reliable but are not guaranteed by us and may be incomplete and may be subject to change without notice. The
information is current as of the date of this document. Neither the author nor NBF assumes any obligation to update the information or advise on further developments relating to the topics or securities
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mentioned herein, and nothing in this Report constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual
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30
Thematic Research
NBF makes no representation as to the proper characterization of the investments for legal, regulatory or tax purposes, or as to the ability of a particular investor to invest or transact in the investments
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National Bank On Copper

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NBCFM Research | Thematic Research

Near-Term Copper Demand Aligned with Global Economy

Market Pricing in Favourable Long-Term Fundamentals

Consensus Estimates Not Adequately Accounting for Cost Inflation/Industry Headwinds

Market Conditions Supportive of Continued Consolidation

Revised Commodity Price Assumptions:

Demand Uncertainty Causing Short-Term Volatility:

Market Focused on Favourable Long-Term Fundamentals:

- Long-term copper fundamentals remain favourable as an anticipated shortfall in supply is

Consensus Not Adequately Accounting for Cost Pressures/Operating Headwinds:

Market Primed for Continued Consolidation:

Figure 2: Summary of NBF Investment Thesis

Source: NBF Estimates

1 – Demand Uncertainty Causing Short-Term Price Volatility

Supply Surplus Supply Deficit Nominal Copper Price (US$/lb)

1,000 938 2022 PEAK $4.50

Copper Price (US/lb)

250 156 192 112 92 168 90 13 28 $3.00

(1,000) Prolonged surplus from 2011-2016 $0.50

Source: NBF Estimates, Refinitiv, Bloomberg

Source: Commodity Futures Trading Commission, NBF

2 – Markets Pricing in Favourable Long-Term Fundamentals

Demand for refined metal from

Source: NBF Estimates, Wood Mackenzie

Figure 6: Implied Copper Price (at 1.0x NAV)

Cu spot price of US$3.92/lb (as of Jan 6, 2023) $3.98

$3.00 $2.82 $2.88

$2.50 $2.28 $2.30 $2.32

Source: NBF Estimates

Source: NBF Estimates, Refinitiv

3 – Consensus Not Accurately Reflecting Inflation and Other Operating Headwinds

Source: NBF, Bloomberg

Figure 9: Cost Trend Analysis (2022 – 2025)

Source: NBF Estimates, Bloomberg

4 – Market Conditions Primed for Further Consolidation

Source: NBF Estimates, Bloomberg

Nevsun > Reservoir Boliden > Kevitsa (FM)

Source: NBF, Company Reports, Capital IQ

Sibanye > Santa Rita & Serrote (Appian)

Stanmix > Kun-Manie (AMC) Evolution > Ernest Henry (GLEN)

EV/ CuEQ Resource (US$/lb) EV/ CuEQ Resource (US$/lb)

Figure 13: Historical Base Metal Valuation Progression

Copper Price, US$/lb

Source: NBF Estimates

Figure 14: EV/CF Progression of Base Metal Producers (Based on Consensus)

Copper Price, US$/lb

Source: NBF Estimates, Bloomberg, Refinitiv

Figure 15: EV/2023E CF Sensitivity Analysis at Various Copper Prices

Source: NBF Estimates, Refinitiv

Source: NBF Estimates, Refinitiv

Figure 17: Base Metal Comparables

S.TO 0.35x TECKb.TO 4.1x S.TO 2.9x

CMMC.TO 77.1% LUN.TO 7.5% CMMC.TO 18.9%

Source: NBF Estimates, Refinitiv

APPENDIX: Revised Metal Price Assumptions, Major Model Revisions, Upcoming

Copper (US$/lb) Current $3.64 $3.80 $3.80 $3.65 $3.65 $3.50

Nickel (US$/lb) Current $11.61 $13.75 $13.75 $12.00 $12.00 $8.50

Zinc (US$/lb) Current $1.35 $1.35 $1.35 $1.25 $1.25 $1.15

Lead (US$/lb) Current $0.95 $0.90 $0.90 $0.90 $0.90 $0.85

Cobalt (US$/lb) Current $23.50 $23.00 $23.00 $20.00 $20.00 $20.00

Molybdenum (US$/lb) Current $20.92 $30.00 $30.00 $20.00 $20.00 $15.00

Potash (C$/t) Current $934.93 $900.00 $900.00 $650.00 $600.00 $600.00

Source: NBF Estimates, Bloomberg