Broker Watch

The ASX 200 stocks hit with the biggest broker downgrades last week: Chalice Mining, Alumina

Mon 11 Dec 23, 4:02pm (AEDT)
Red traffic light with a construction site in the background
Source: iStock

Key Points

  • Analysts downgraded their target price for Chalice Mining to reflect weaker palladium prices
  • Lithium stocks including IGO and Core Lithium received target price cuts despite the bounce in Chinese lithium futures

Chalice Mining (ASX: CHN) shares heavily track the performance of palladium as its Gonneville Project anticipates approximately 55% of revenues to come from palladium production.

So what happens when palladium prices dip to five year lows of US$927 an ounce?


The Biggest Broker Downgrades

Ticker

Company Name

Close Price

1-Week

Target Price

Prev Target Price

% Dif

CHN

Chalice Mining

$1.71

22.2%

$2.90

$3.32

-12.7%

AWC

Alumina

$0.81

14.1%

$0.92

$1.00

-8.0%

SGR

The Star

$0.52

2.0%

$0.86

$0.93

-7.5%

MTS

Metcash

$3.58

0.9%

$3.81

$4.01

-5.0%

IGO

IGO

$8.18

-1.9%

$11.17

$11.69

-4.4%

LTR

Liontown Resources

$1.38

1.9%

$1.96

$2.04

-3.9%

CXO

Core Lithium

$0.27

-1.9%

$0.39

$0.40

-2.5%

WDS

Woodside

$29.81

-3.3%

$33.33

$34.14

-2.4%

NAN

Nanosonics

$4.39

6.8%

$4.71

$4.82

-2.3%

NIC

Nickel Industries

$0.72

0.7%

$1.06

$1.08

-1.9%

'Target price' is an aggregate of Refinitiv broker target prices. % Dif compares target prices between 1 and 8 December 2023

Palladium prices have been in a downward spiral since March 2022, down 47% year-to-date and down 50% in the past twelve months.

Palladium
Palladium price chart (Source: TradingView)

What's interesting is that Chalice's Gonneville scoping study assumed palladium prices of US$2,000 an ounce to derive at a post-tax net present value between $2.8 billion and $4.2 billion. The current spot price environment would assume a substantial discount to those study assumptions.

Chalice Managing Director Alex Dorsch said in August: "There is about seven plus years until we are actually producing any metal, so we are not talking about producing in the current commodity price environment, nor have we designed our operation in the current spot price, commodity price environment," the Australian Financial Review reported. But this also assumes that palladium can recover from the downward spiral and double from current levels.

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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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