Macquarie sets $1.40 price target for Mincor, with Kambalda development ‘underway and on plan’

acquarie Equities has maintained its Outperform recommendation for nickel developer Mincor Resources (ASX: MCR)
29th January 2021
Resources Rising Stars

Macquarie Equities has maintained its Outperform recommendation for nickel developer Mincor Resources (ASX: MCR) in the wake of its well-received December quarterly report, issuing a 12-month price target of $1.40 per share.

Mincor shares were trading yesterday at around $1.03 per share.

In an updated research note, Macquarie says Mincor has commenced development activities at its Durkin North and Cassini mines at Kambalda, with total development metres in line with DFS estimates.

“Mincor is set to return to produce status in early 2022 and we see material upside to our base case assumptions through exploration success,” Macquarie said, pointing out that recent exploration results have confirmed potential extensions of the Cassini North discovery – presenting a key near-term catalyst.

Macquarie notes that the portal at Cassini was fired on 11 November, with a total of 215 development metres achieved in the quarter. At the Northern Operations, development in the quarter was 309m.

During the quarter, Mincor also agreed the use of grid power at Cassini with BHP Nickel West from April 2021, with the deal expected to provide savings of $7-10 million over five years.

First production is expected next year, with Macquarie estimating that nickel concentrate production will ramp up to 16,400 tonnes by FY24.

Mincor had $92.8 million in cash at the end of the quarter, with finalisation of the $55 million Project Financing Facility expected in the current quarter.

“Project development is expected to remain Mincor’s core focus through 2021, ahead of production commencing in early 2022,” Macquarie says.

“Exploration drilling at Cassini North that confirms expansions of the current mineralisation presents potential positive catalysts for Mincor during the construction period.”

Macquarie’s 12-month price target of $1.40 per share is based on a 50/50 blend of NPV / four times EBITDA methodology.


Image: Mincor Resources 


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