Bell Potter latest.... extract from their reportChalice Mining...

Bell Potter latest.... extract from their report

Chalice Mining Ltd (CHN) Major Gonneville extension confirmed

Drilling validates seismic techniques at Gonneville

CHN has reported that drilling to test the results of a recently completed 2D seismic survey has successfully intersected the interpreted extension of the Gonneville deposit. The Gonneville intrusion was intersected in diamond drill hole JD363 from 397-912m down-hole (~515m wide), with the hanging wall and footwall contacts intersected within ~20m of their modelled positions. Several zones of sulphide mineralisation were intersected within the intrusion interval, approximately 850m down plunge of the defined Resource boundary, and are interpreted to be continuations of the high-grade G zones that are defined within the Gonneville Resource. In our view, the drilling achieves two objectives: i.) confirms the material extension of Gonneville intrusion to the north, where it remains open; and ii.) validates seismic surveys as a highly effective exploration tool, particularly in combination with EM methods.

Significant Resource growth potential

Assays remain pending for the sulphide intersections reported in hole JD363 but, should the visual estimates be confirmed by assays (all pending), it points to significant Resource growth potential across the Gonneville deposit. The Gonneville Resource is already relevant on the global scale, at 350Mt @ 0.96g/t 3E (Pd+Pt+Au), 0.16% Ni, 0.10% Cu, 0.015% Co. The main part of the current Resource has a strike length of ~1.8km, compared with potential 850m down-plunge extensions. In addition, ongoing Resource extension drilling targeting zones down-dip of the known Resource at Gonneville have returned further high grade results up to 600m outside the current Resource, also pointing to significant potential growth.

CHN as a strategic partner and critical minerals supplier

The potential for rapid and cost-effective Resource growth is attractive for a strategic partner and builds time-pressure to do a deal. The recent passing of the US Inflation Reduction Act (IRA) bill has reportedly led to a material step-up in third party interest, as the IRA bill ties manufacturing sector tax and financing incentives to the sourcing of raw materials not only from suppliers with a known provenance, but also the sourcing of strategic minerals from “Western Allies”. With nickel, cobalt and PGE’s on the US’ critical minerals list, CHN and its Julimar Project are clearly of interest.

Investment thesis – Speculative Buy, Valuation $11.10/sh

CHN’s 100%-owned Julimar project is a globally significant PGE-Ni-Cu deposit. Located 70km north of Perth in WA, it represents a unique opportunity to establish a new, strategic PGE and base metals supply in a top mining jurisdiction. This is reinforced by the inclusion of PGE’s nickel and cobalt on Australia’s and the USA’s critical minerals lists, due to their role in the lithium-ion battery and hydrogen fuel cell production value chain and Russia’s market dominance. The latest update reinforces the exploration upside at Gonneville. Our valuation remains unchanged at $11.10/sh and we retain our Speculative Buy recommendation.