Blackstone Minerals coverage comes with
A$1.90 target and buy recommendation

What attracted Shaw and Partners was the project economics: low capital intensity, premium product, access to low-cost hydropower, tax advantages and low-cost labour.

Ta Khoa Nickel-Copper-PGE Project is west of Hanoi in Vietnam and includes an existing modern nickel mine built to Australian Standards.

Blackstone Minerals Ltd (ASX:BSX, OTCQX:BLSTF, FRA:B9S)’s potential to become a globally significant green battery metals supplier has led Shaw and Partners to initiate coverage with a buy recommendation and A$1.90 price target.

This is well above last sales at A$0.43.

Blackstone is one of the newer players in the nickel game and has a 90% interest in the Ta Khoa project in Vietnam, where it has a maiden resource and scoping study for the large-scale Ban Phuc Nickel-PGE deposit.

About the project

The project includes the Ban Phuc nickel mine, which was in operation from 2013 to 2016 until it was put into care and maintenance.

It includes an integrated upstream and downstream processing business in Vietnam to produce Nickel-Cobalt-Manganese (NCM) battery precursor products for Asia’s lithium-ion battery industry.

It is important to note, that Blackstone already has key relationships with a tier 1 Korean battery manufacturer, EcoPro, among others, with whom it has constructed a downstream processing business.

Scott Williamson, managing director of Blackstone Minerals, was recently on Proactive’s Coffee with Samso explaining the Blackstone proposition.

Blackstone recently welcomed the outcomes of a pre-feasibility study for the proposed downstream Ta Khoa Refinery in Northern Vietnam.

Shaw and Partners’ base case

Shaw and Partners assumes a final investment decision and ramp-up of operations, with first production in CY24.

Blackstone recently released a downstream Business Unit PFS for a 400ktpa refinery with NPV of US$2.01 billion and an IRR of 67% that will produce ˜85.6ktpa of NCM811 precursor.

Shaw and Partners base case for the downstream business is relatively in line with Blackstone’s PFS with an NPV10 of ˜US$1400, IRR of 52% and development CAPEX of US$490 million. An 11-year refinery life producing ˜88ktpa NCM811 battery precursor at a 120% payability is also assumed.

Shaw and Partners base case model of Blackstone’s Upstream Business Unit has a post-tax NPV10 of US$193 and an IRR of 25% assuming open cut pit requiring a development capital expenditure of US$250 million and an 11-year life-of-mine at circa 200kt/yr NI/CO concentrate production from an ore fed at 6Mtpa and a head grade of 0.5% Ni/0.01% Co/ 0.06% Cu.

Shaw and Partner’s base case model also assumes all-in average life-of-mine sustaining costs of US$4.30/lb Ni (2021 Real).

What attracted Shaw and Partners was the project economics: low capital intensity, premium product, access to low-cost hydropower, tax advantages and low-cost labour.

The analyst’s price target of A$1.90 is a fully diluted DCF valuation of a ˜6Mtpa open pit mine and 400ktpa nickel concentrate refinery.