Broker Watch

Macquarie's five preferred base metal picks: IGO, Mincor and more

Wed 16 Nov 22, 1:42pm (AEST)
Mine site with excavators and truck
Source: iStock

Key Points

  • Positive newsflow from China has helped base metal prices rally in the past two weeks
  • Macquarie has a preference for producers including Sandfire, IGO and Mincor
  • Centaurus and Chalice Mining were viewed as two key development plays

Base metal prices were already recovering ahead of Monday's news about China's sweeping rescue package to bail out its beleaguered real estate sector.

"Nickel, copper, lead, and zinc prices were 9.6%, 6.8%, 6.7%, and 5.5% higher last week buoyed by the loosening of China’s lockdown restriction," Macquarie analysts said in a note on Tuesday.

The investment bank said its preferred Australian base metal picks include:

Preferred base metal play summary:




Target price


Sandfire Resources












Centaurus Metals




Chalice Mining



Source: Macquarie Research

Leveraged to spot prices

Macquarie says that Nickel Mines (ASX: NIC) offers the greatest leverage to nickel prices in FY23, with a 10% increase in LME nickel prices able to drive a 69% increase in the company's nickel project NPVs.

"Copper-focused producers have similar NPV sensitivities as nickel-focused producers but broadly higher earnings sensitivity in FY24," said Macquarie.

Sandfire is viewed as the most sensitive to copper prices, with analysts calculating that a 10% increase in copper price translates to more than 250% earnings upside for FY23 estimated earnings.

The current spot prices for copper and nickel sit above Macquarie's price forecasts. The analysts believe Sandfire has the highest increase in earnings under the current spot price scenario in FY23. While Jervois Global (ASX: JRV) was flagged for a potential -12% decrease in FY24 earnings under a spot price scenario.

Valuations for Australian-based producers could also be materially affected by a weaker Australian dollar, with valuation upside of 10-30% for a 10% fall for the AUD/USD, according to Macquarie.

Macquarie copper price forecast
Spot copper prices are slightly above long-term forecasts (Source: Macquarie Research)


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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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