TWO Western Australian nickel miners, two 12-month price target upgrades. But its there that the similarities end for Jubilee Mines and Minara Resources in the eyes of Macquarie Research Equities, judging by reports released over the companies earlier this week.
Analysts Lee Bowers and Jim Copeland both upgraded their 12-month price targets for Jubilee and Minara to $10 per share and $1.78 per share respectively, on the back of upgrades to Macquarie's nickel price forecasts.
The upgrade, however, was not enough to shake the group's underperform recommendation on Minara, due largely to another quarterly production result impacted by further acid plant issues from the company's Murrin Murrin laterite operation.
Minara's production for the second quarter of 6,760t nickel and 510t cobalt came in short of Macquarie's expectation of 7,910t nickel and 540t cobalt.
"We continue to struggle with the volatility and underperformance of the Murrin Murrin nickel project," the analysts said.
"The high level of maintenance costs and sustaining capital remain a concern. On a standalone basis, the forecast margins generated at the targeted long-term production rate of 32-35,000t per annum are insufficient to justify current Minara pricing."
The pair were far more glowing of Jubilee, buoyed by continued exploration success at the company's Cosmos project and a recent upgrade to the Prospero deposit's resource.
Jubilee recently upped the amount of contained metal at Prospero by 31% to 79,200t nickel.
Macquarie is confident further exploration success could also come from the Jubilee ground.
"Jubilee remains our preferred nickel exposure, with its high operating margins, healthy dividend yield and first-class exploration potential," the analysts said.
"While trading multiples remain stretched, the valuation differential is quickly closed with the anticipated discovery for further 40,000t-plus high-grade nickel deposits on Jubilee's highly prospective tenements."
MRE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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