NIO, Nevada Copper, Volkswagen - Business is booming

Germany steps on the gas

The newly elected traffic light coalition focuses even more on climate targets. However, a new dynamic has already developed in the electromobility market in Germany over the year, boosted by subsidies. More than 1 million electrically powered passenger cars are already on the roads. Germany is thus well on the way to establishing itself as the lead market for e-mobility and achieving the set target of 7 to 10 million registered electric vehicles by 2030.

All German automakers are now pursuing ambitious electrification strategies. With its core brand, the Volkswagen Group aims to serve 70% of passenger car sales in Europe with pure electric vehicles and 30% with plug-in hybrids by 2030. BMW aims to electrify 50% of all models by 2030. Daimler also wants to offer only new passenger cars with electric units in the future with its "Electric First" strategy.

Huge copper demand

For renewable energies, and especially for electromobility, the demand for copper is enormous. The red metal is considered a base metal due to its nature and conductivity. As a result of the green revolution, experts believe that more copper will be mined in the next 25 years than in the entire history of humanity to date. However, the high demand is offset by an extremely scarce supply. Due to the weak base price, investments in new projects have been strongly neglected in recent years. Goldman Sachs analysts have already called for a new copper supercycle.

One of the only production-ready new sources of copper supply in North America is in the United States, more precisely in Nevada. The 60 sq km Pumpkin Hollow project, already operated by Nevada Copper since 2007, has significant reserves and resources of copper, gold and silver. Due to several delays to shutdown and management changes, the initially planned production target of 5,000t of ore per day was pushed back further and further. However, high-grade production is currently underway at the underground mine, and the open pit project is on track for a feasibility study.

Turnaround underway

In the past, Nevada Copper was also accused of being too weak financially, which the newly appointed management around CEO Randy Buffington was able to solve within a short time. In addition to optimizing operational management, additional financing and a significant deferral and expansion of credit facilities were achieved with KfW, a senior lender to Pumpkin Hollow, and with major shareholder Pala Investments, which holds approximately 38% of Nevada Copper. In addition, the Canadians secured around EUR 78.50 million through a capital increase.

Operationally, the new management is also stepping on the gas. Buffington revealed that the Company has advanced about 760 lateral equivalent feet in the last 30 days, a 20% increase in average day length over the previous 30 days. The high-grade Sugar Cube zone is scheduled to be drilled in December, and mining is expected to begin early in the first quarter of 2022. With the additional funding received from its recent equity offering, the Company intends to conduct an infill drilling campaign and update its open pit studies to consider opportunities for upsizing, more extensive resources and other optimization measures. Further updates on the Company's 2022 development plan are expected to be released shortly.

Following the share price decline from EUR 2.37 to currently EUR 0.38, Nevada Copper offers a speculative entry opportunity at a low level, especially on long-term rising copper prices. The stock market value is currently EUR 75.18 million.

Strong November for NIO

After a minor dip in October, November was strong again for electric carmaker NIO, which delivered 10,878 vehicles in November 2021, representing a growth of 105.6% YOY. Vehicle deliveries in November were able to catch up significantly compared to the previous month. October was marked by a reduction in production volume due to the restructuring and upgrading of production lines and preparations for the launch of new products.

Deliveries included 2,683 ES8s, the brand's flagship 7-seat electric SUV, 4,713 ES6s, the midsize SUV, and 3,482 EC6s, as NIO calls its SUV coupe. In total, NIO has delivered 80,940 vehicles so far in 2021, increasing 120.4% YOY. By November 30, 2021, cumulative deliveries of the ES8, ES6 and EC6 reached 156,581 vehicles.

Climate change is at the top of the priority list for policymakers, along with the fight against the Corona pandemic. The shift from combustion engines to battery-powered vehicles is accelerating in the transport sector. However, this transformation requires an enormous amount of copper. Due to a debt restructuring and a management change, Nevada Copper appears attractive. NIO could regain momentum in its growth.