Brokers upgrade outlook for Centaurus following well-received resource update

Several major brokers were quick to lift their price targets for Centaurus Metals (ASX: CTM) after the fast-growing nickel developer unveiled an updated Mineral Resource estimate for its flagship Jaguar project in Brazil last week.
12th February 2021
Resources Rising Stars

Several major brokers were quick to lift their price targets for Centaurus Metals (ASX: CTM) after the fast-growing nickel developer unveiled an updated Mineral Resource estimate for its flagship Jaguar project in Brazil last week.

The updated Resource, following six months of in-fill drilling, resulted in a 50% increase in Indicated Resources to 223,000 tonnes of contained nickel, with the global estimate increasing to 58.6 million tonnes grading 0.95% Ni for 557,800 tonnes of contained nickel.

“Jaguar Project resource significantly more robust,” said Perth-based Euroz Hartleys in an updated research note in which it lifted its price target from 85c per share to $1.15. The stock has been trading this week at 82-86c.

Euroz Hartleys has a Speculative Buy recommendation on the stock.

“The 223kt Ni Indicated Resource underwrites +10 years of open pit operations on our preliminary 2.7Mtpa development scenario,” said Euroz Hartleys analyst Jon Bishop.

“We have adjusted our base case development accordingly, removing any underground contribution, highlighting that over 80% of the global Resource sits within 200m of surface,” he added.

“A maiden Scoping Study due next month will help refine our base case asset valuation.”

He said additional work streams regarding further value enhancement via additional refining circuits “will likely be decked early in the June quarter”.

Meanwhile, Sprott Equity Research said the “Measured and Indicated” component of the resource, 20Mt at 1.15% NiEq, is “well over” its previously modelled 15Mt open pit reserve.

Sprott analyst Broke Salier has increased the price target to C$1.05 per share from 90c previously, while maintaining a BUY rating.

“We think that the 1Q21 Scoping Study, followed by aggressive greenfield and depth drilling, permitting, engineering studies and nickel pricing, should all support continued share-price momentum this year,” he wrote.

Perth-based Argonaut also revisited its project valuations based on the latest resource update and revised input assumptions.

“Argonaut has increased CTM’s price target to $1.27 per share based on the simple average of two company valuations incorporating alternate development scenarios,” the broker said while maintaining a SPEC BUY recommendation.

Finally, respected Sydney-based analyst Gavin Wendt also weighed in. In his widely-circulated Minelife newsletter, Wendt wrote:” The Jaguar project allows CTM to pursue development of an advanced and well-located nickel sulphide project that offers high-grade open-pit development potential.

“Nickel sulphide deposits like Jaguar are extremely rare globally and it represents a game-changer for CTM.

“The key is the near-surface nature of the mineralsation, with 80% lying within 200m of surface, meaning mining and grades are more akin to that of an open-pit gold operation.

“Jaguar has outstanding potential to be a low strip ratio, long-life, open-pit operation with strong economics - putting CTM in a position to be a 20,000-plus tonne per annum nickel producer by the end of 2024.”

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