Garimpeiro took time out from stuffing his face with sausage rolls and macarons at the AFL’s Gather Round in Adelaide last week to drop in to hear what was being said at a none too coincidental Resource Rising Stars conference, also dubbed the Gather Round.
Held at the National Wine Centre, lots of interesting stuff was said at the investor conference by junior miners and explorers.
But the standout for Garimpeiro was the presentation by the boss of sulphide nickel stock Centaurus (ASX:CTM), Darren “Flash” Gordon.
Gordon’s message was simple enough.
While stock has been trashed in recent times along with all other nickel stocks – it was trading mid-week at 34c compared with $1.40 two years ago – Gordon reckons it has been unfairly treated.
He acknowledged that there was a lot of alarm around the flood of laterite-sourced nickel coming out of Indonesia, the main factor in nickel’s 45% price collapse in CY2023.
But he said that was no reason to lump CTM and its flagship Jaguar sulphide nickel project in Brazil in with other ASX-listed sulphide nickel stocks.
That’s because Jaguar, a near 1 million tonne resource of (contained) nickel, has the potential to be a low-cost producer more than capable of matching it with the Chinese-backed Indonesian laterite-sourced industry.
Sadly, many of the recent sulphide nickel mine closures in WA shows they don’t have that capability.
Gordon also acknowledged that before CTM’s share price can repair itself the company has to demonstrate that Jaguar will be a low-cost producer sitting in the lowest quartile of costs on a global basis.
That is just around the corner with CTM planning to release a feasibility study in to Jaguar’s development in June.
Centaurus share price today
“Hopefully the economics shown in that feasibility will dwarf our market cap,’’ Gordon told the crowd.
“Our goal with this project is to be able to sit side by side with, and compete with, this new supply of nickel that is coming in to the global market from Indonesia.’’
“While Indonesia has forced a lot of nickel sulphide production to shut in Australia because of the relatively high cost, we think Jaguar and what we have got in Brazil will be different because of the low cost structure.’’
“The proof will be in the pudding when we deliver the feasibility study in June,’’ Gordon said.
Analysts are on board with the CTM story, with share price targets placed on the stock ranging from 80c (Argonaut and Canaccord) to $1.40 (SCP Equity).
Unlike the “dirty’’ nickel being source out of Indonesia, Jaguar is expected to have one of the lowest carbon emissions per tonne of nickel produced in the world of 7.2t compared with the 20t, 30t, 40t and more common in the nickel industry, with Indonesia at the high end.
The reason for Jaguar’s low emissions is the ability to access to Brazil’s 80% renewable and low-cost electricity supply. It is an ESG advantage that should help CTM in attracting finance/strategic partners/offtakers to help get Jaguar to first production, possibly in 2027.
CTM picked up the Jaguar project from Brazilian heavyweight Vale about four years when the resource base was about one-third of what it is today.
Before the arrival of Jaguar CTM’s main go in the country was the Jambreiro iron ore project in the southeast of the country which analysts value at more than $100m or close to two-thirds of the company current market cap of $168 million.
In more recent years it has been parked up given the world-scale potential of the Jaguar project.
But just this week CTM revealed Jambreiro was now being advanced as a potential producer of high-grade iron ore pellets for electric arc steel producers. The pellets have commanded up to a 30% premium on iron ore prices in the last two years because their high-grade results in lower emissions in the steelmaking process.
And back at the Gather Round, Gordon revealed CTM was about to roll a rig up to the Boi Novo copper-gold exploration target. It is of the big IOCG type that the Carajas province where it is located (like Jaguar) is noted for.
Gordon said the rig will begin testing “genuine’’ targets in 2-3 weeks’ time. In the rising copper market, it will be one to watch.
In arriving at its 80c share price target, Argonaut said that the Jaguar project remained underappreciated by the market and that the Boi Novo project had the potential to yield a significant copper-gold discovery.
As for the Jambreiro iron ore project, it was a “sleeper’’ asset it valued on a post-tax NPV basis at $161 million.
So there it is, a three steak-knife job if you will.
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.
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