Mincor’s nickel restart plan wins analyst plaudits

The Kambalda nickel restart plan unveiled by Mincor Resources (ASX: MCR) last week in its much-anticipated Definitive Feasibility Study (DFS) announcement has received positive reviews from key brokers covering the stock...
3rd April 2020
Resources Rising Stars

The Kambalda nickel restart plan unveiled by Mincor Resources (ASX: MCR) last week in its much-anticipated Definitive Feasibility Study (DFS) announcement has received positive reviews from key brokers covering the stock.

Sydney-based institutional broker Petra Capital has maintained its BUY recommendation and set a $1.00-a-share target price for Mincor (current price: 49c), after incorporating the DFS results and revised (post-COVID) nickel price and foreign exchange assumptions.

“Mincor has outlined a solid and readily achievable plan to re-start nickel production from its nickel assets around Kambalda,” said Petra Capital analyst Brett McKay in a fresh research note.

“The DFS outlines an initial 5-year mine life producing up to 16.4ktpa of nickel-in-concentrate at AISC of A$4.47/lb Ni,” he said.

“This delivers an impressive 88% post-tax IRR and 1-year payback. Funding of the $97m peak cash draw (including pre-production CAPEX of $68 million) will be assisted by current cash of $52 million and securing a modest debt facility in the June Quarter.”

McKay says there are multiple areas of upside to deliver a longer mine life, including upside at the cornerstone Cassini deposit, which is improving at depth, and prospective targets at Cassini North, Durkin North Extension and the large area between Durkin North and Long.

“With all permits in place, early works are underway and first concentrate is due in December Quarter of 2021,” McKay wrote.

“We continue to highlight Mincor’s unique and strategic position in the Australian nickel sector, with low-cost, near-term production and a large footprint in one of the world’s most prolific nickel regions.”

Meanwhile, Perth-based institutional broker Euroz Securities has upgraded its price target for the stock to $1.00-a-share, underpinned by an NPV-based valuation of 86c-a-share.

“The Kambalda restart DFS is a comprehensive piece of work that demonstrates the robustness of the Company’s restart strategy,” said Euroz analyst Jon Bishop.

“Cassini is clearly the key: the maiden Reserve has increased Group inventories 132%. The discovery has single-handedly transformed the Mincor value proposition and continues to demonstrate potential to build the life-of-mine beyond the 5 years in the DFS.

“Moreover, the grade and tenor of the discovery strongly influences project economics.

“It is also opening up the Widgiemooltha Dome nickel potential, with the recent Cassini North target showing potential for (at least) some early development decline tonnage to improve early economics.”

“We maintain our Speculative Buy recommendation, increasing our valuation and price target on the back of the DFS,” Bishop added.

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