AllStreetsWolf 📈@AllStreetsWolf
Analyst coverage on behalf of @MidnightSunMine
🇨🇦 $MMA.V 🇺🇸 $MDNGF
Regardless of yesterday’s knee jerk sell-off reaction, institutional sentiment continues to support the large-scale, bulk-tonnage Lumwana analogue thesis.
Sprott Capital Partners out with a 5 page interpretation & a reaffirmed BUY / adjusted $2.65 price target off yesterday’s assays. An implied +157% upside based on yesterday’s $1.03 close
This outlook is reinforced especially when considering that drilling has tested only 5.3km of strike along their 11.2km copper-in-soil anomaly
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In our view, today refines the model – we’ve consistently seen broad lower grade mineralization averaging 0.3% Cu, and operationally we think it makes more sense to mine the broader zones than try to high grade to target 0.5% Cu. We like the scale of the asset, and the fact that Zambia is a place you can drill cheaply and permit a mine. The potential here is a bulk near surface that is permittable and buildable; given the positive outlook for copper and lack of genuine new discoveries with scale, we think the natural torque and scale are worthwhile combination.
Model changes: We previously based on our valuation on 500MT at 0.5% Cu and a 3% insitu multiple. We adjust this to 700Mt at 0.3% Cu, which we think better reflects the grades to date, and a bulk system.
We maintain our BUY rating and adjust our PT to C$2.65 based on a 0.50x P/NAV multiple to our NAV and add US$50m for Kazhiba, US$30m for other exploration.
The next ~1.3km of drilling results approaches the copper clearing and we expect better grades and widths given stronger geochemical results and the strong correlation between soils and assay results to date. We expect drilling to continue north over Dumbwa’s 11km strike length, while we also see potential to extend mineralization to the east.
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