Find out which investment bank retained its bullish stance on smallcap Lunnon Metals

The analyst team in the lab at Macquarie Research put their weight behind smallcap ASX explorer Lunnon Metals (ASX:LM8) on Wednesday. 

The investment bank has given Lunnon a twelve month price target of $1.30. 

As at 1415 AEST Wednesday 25 January 2023, Lunnon’s share price is 99c (up 2% in the second last hour of trade). 

Macquarie’s research note used Tuesday’s close price of 97c in its forecast, at which time, the 12 month target reflected a total return of 34%. 

Using Market Index’s free company data, a broker consensus scan shows that four brokers recommend Lunnon as a “Buy” and one broker recommends Lunnon as a “Hold.” 

Why is Macquarie bullish? 

Lunnon has recently expanded its JORC-compliant Mineral Resource Estimate (MRE) at its keystone Foster-Baker Project. The nickel play consists of two large separate prospects, Foster and Baker, respectively. 

Foster contains a historical mine that has since become flooded, a typical water table issue with disused mines. 

Macquarie highlighted the following: 

Baker 

• Lunnon increased the MRE for its Baker deposit by 95% over six months from 568kt of ore for 15.8kt of nickel, up to 929kt ore for 30.8kt of nickel. 

• Lunnon expects to commence mine design for Baker in 1Q CY2023 

• Final Investment Decision expected “through the year” 

Foster 

• Foster MRE increased by 3.7kt in nickel based on review of historical drilling results 

• Permits to dewater and re-enter historical mine at Foster “well advanced” 

While Lunnon’s latest quarterly results with regards to cash flow only had a modest impact on earnings, according to Macquarie Research, it maintains its $1.30 price target and stated cash flows were as it expected. 

The elephant in the room? Nickel prices remain firmly elevated over pre-COVID levels, despite coming down from recent peaks.

A look at Lunnon's one year charts