Fair Price for CHN with current resource ?, page-13

From RRS today:

Chalice’s bonanza find just gets better – and cheaper

Plus, shares in battery graphite producer Syrah hitch an EV ride while Mincor looks set to follow suit in the name of nickel

29th January 2021
Barry FitzGerald
Share Article






Buying into one of the best metals discoveries in recent times – Chalice’s Julimar near Perth – has just got a lot cheaper, even though its story has just got a lot better, such are the joys of investing in the resources space during periods of metal price volatility.
Chalice (CHN) was off 13% in Thursday’s market to $4.04. Nothing particularly wrong with that given $4.04 compares with a pre-Julimar discovery 52-week low of 14.5c. But it is down from a recent high of $4.92.
Like the rest of the resources sector in recent days, Chalice’s share price has succumbed to the risk-off mood of investors on fears that China’s liquidity tightening – and its Lunar new year break next month – would hit demand, taking metal prices down in the process.
But as mentioned, the Julimar story has just got better, with Chalice reporting the six-rig drill-out at the greenfields site has defined four new high-grade and shallow zones.
One of the hits was indeed special – the hit in the G11 zone of 11m at 13g/t palladium, 1.3g/t platinum, 0.3g/t gold, 0.1% nickel, 0.1% copper and a sniff of cobalt from 78m.
Even at its “reduced” price of $4.04, Chalice commands a market cap of $1.44 billion (fully diluted). That’s too rich for some ahead of Chalice reporting a maiden resource estimate for Julimar later this year.
But not for all. Macquarie has long been a fan of Julimar and has continued with a $5.40 a share price target on the stock.
“The discovery of four new higher-grade zones at Julimar suggests that there is likely to be considerably more near-surface mineralisation mineable via an open pit than we currently assume in our base case development scenario for the project,” Macquarie said.
“Importantly, the core high grade zones are being confirmed as continuous at depth over longer strike lengths, with additional mineralisation also confirmed in shallow extensions to the south.
“The completion of the infill drill out of Julimar and release of the maiden resource later this year presents as a material catalyst for the stock. We note there remains material upside risk to our base case valuation under a spot price scenario.”