London broker becomes latest to tip Cradle Resources shares will double
Broker Mirabaud says imminent funding and offtake agreements for Cradle’s world-class niobium project will drive big increases in the company’s share price
London’s Mirabaud has become the second broker in a week to predict that shares in emerging niobium producer Cradle Resources (ASX: CXX) will more than double.
In an extensive new research report, Mirabaud says Cradle is in the process of securing funding and offtake agreements for its half-owned Panda Hill niobium project in Tanzania.
The report also highlights the potential to slash Panda Hill’s forecast US$200 million capital cost by up to US$20 million.
In light of this strong pending newsflow, Mirabaud has set a 56c price target for Cradle shares compared with their current price of 25c.
“Niobium is a ‘critical’ metal because it is at supply risk, owing to the oligopolistic nature of the market (currently only three producers) while, for many countries (the US included), it is also considered as a ‘strategic’ metal as it is essential for highperformance applications in steel,” Mirabaud says in its report.
Mirabaud’s report follows last week’s research note from Perth broker Argonaut, which also tipped Cradle shares to double.
Argonaut described the company’s half-owned Panda Hill project as “the best undeveloped niobium project globally”.
“Argonaut sees Cradle as a likely takeover target given the recent acquisitions of niobium mines,” it said.
The Panda Hill feasibility study found the project would enjoy outstanding economics. The study highlights that Panda Hill will be a 30-year project, generating average EBITDA of US$112m, an NPV of US$404m and a 27 per cent post-tax internal rate of return.
Argonaut said that following completion of the feasibility study in April this year, the project was entering the tendering phase for key works such as mining, infrastructure earthworks, camp construction and mechanical equipment.
“Debt financing is well advanced with financiers having completed site visits and draft term sheets received,” Argonaut said.
“Offtake negotiations are also underway and are expected to be completed in the coming months.
“Front End Engineering Design (FEED) work is progressing and is expected to bring significant improvements on the feasibility study.”
Argonaut also cited the strong outlook for niobium, which is used to lighten and harden steel to make it more energy efficient, as a key driving factor for Cradle’s share price.
“Demand for niobium is set to increase, largely driven by growing demand for higher quality steels and lighter steel alloys used in energy efficient vehicles,” it said.
“Adding just ~$6-9 worth of niobium to a mid-sized car reduces the weight by ~100kg and improves fuel efficiency by ~5%.
“China has a strategy to move towards higher quality steel products, therefore its consumption of niobium is set in increase.”
Click here to read the research report from Mirabaud.
To read the Argonaut report,
click here.
