Materials

Chalice soars after flagging “material” potential at its Julimar Nickel-Copper-Platinum mine in WA

By Market Index
Wed 23 Nov 22, 12:06pm (AEST)
Scoping
Source: Unsplash

Key Points

  • Chalice plans to advance development studies and regulatory approvals for a potential mine at Gonneville
  • Chalice's share price has underperformed in 2022 within challenging macro conditions
  • Chalice is still considering securing a strategic minority joint venture partner to assist in developing a potential mine at Gonneville

Chalice Mining (ASX: CHN) was up 7.31% at the open after the mineral exploration company revealed that drilling at its 100-owned world class Julimar Nickel-Copper-Platinum mine in WA showed there was potential for “material resource growth”.

In parallel with ongoing exploration activities at Julimar, Chalice also plans to advance development studies and regulatory approvals for a potential mine at Gonneville (on Chalice-owned farmland).

AGM update

During today’s AGM which coincided with today’s update, Chalice’s chairman Derek La Ferla reminded shareholders that during the past year, the company has delivered two successive Mineral Resource Estimates for the Julimar Project, which confirmed:

  • The Gonneville Deposit as one of the largest nickel sulphide discoveries worldwide in over 20 years.

  • The largest PGE discovery in Australian history.

“This Resource provides an outstanding foundation and strong starting point for the initial Gonneville Scoping Study,” notes La Ferla.

“The Study will mark a pivotal milestone for Chalice, helping to map the Gonneville Deposit’s development pathway and options, and signalling the start of the Company’s transition towards project development.”

La Ferla also reminded investors that:

  • Chalice is still considering securing a strategic minority joint venture partner to assist in developing a potential mine at Gonneville.

  • Chalice is fully funded for all planned exploration and pre-development activities through to the end of 2023 following the highly successful $100m capital raising in May.

Share price underperformance

Within today’s AGM presentation, Chalice also reminded investors that while the price has increased 30x since the Julimar discovery, it has underperformed in 2022 within challenging macro conditions.

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Potential long-term value creation

Meantime, management notes exploration was continuing rapidly that targeted the discovery of new high-grade Ni-Cu-PGE sulphide deposits which could add considerable value to a mine at Gonneville.

Management also flagged the possibility of different styles of mineralisation being intersected along the complex, potentially contributing to significant long-term value-creation that a world-class mineral district can create.

Drilling to date supports the interpretation of the Gonneville Intrusion (and the broader Julimar Complex) as having a rare chonolith-like geometry, which is similar to other major ultramafic-mafic orthomagmatic systems worldwide.

Gonneville deposit extensional drilling

Drilling to date has confirmed several north-westerly plunging shoots to the G2, G4 and G11 high-grade sulphide zones, which strike to the north-north-east and dip to the west-north-west.

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Given that broad intersections highlight the significant near-term growth potential in the high-grade portion of the current resource, step-out drilling in this northern portion of the deposit-west direction is being prioritised.

With the latest results suggesting that previous RC drilling in this area was too shallow, management also notes the northern end of the Resource pit shell could deepen once the new results above have been modelled.

Meantime, further drilling at the Hartog Prospect to test the new offset interpretation of the Julimar Complex to the west is expected to commence in the coming weeks.

What brokers think

The S&P/ASX300 company’s share price is down -50% over one year but has been bumping higher since late June.

Consensus is Strong Buy.

Based on Morningstar’s fair value of $7.22 the stock appears to be undervalued.

With the September-quarter trading update having met Macquarie's forecasts, the broker retains an Outperform rating and $7.50 target price. (31/10/22).

Ord Minnett was encouraged by recent drill results at Hartog, which will assist with Chalice Mining's negotiations for a potential minority joint-venture sell-down and retains a Speculative Buy rating and $6.50 target. (21/10/22).

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Chalice Mining's share price over three months.

 

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