Broker Upgrades: These two ASX gold-copper stocks get a blessing and solid price targets

MA Moelis gives Carnaby a ‘buy’ rating with a lofty target price
Carnaby’s Greater Duchess Project set to become profitable
RBC rates FireFly ‘outperform’ based on its Green Bay project

Carnaby seen as strong play in copper market shortage

Broker MA Moelis has given Carnaby Resources (ASX:CNB) a buy rating with a price target of $0.86 per share, reflecting a substantial upside from its current price of $0.39.

Carnaby is in the midst of developing its flagship Greater Duchess Project in Queensland, which has substantial copper and gold resources.

MA Moelis believes this project is on track to become a profitable operation with low upfront capital requirements and a relatively fast path to production.

Greater Duchess spans 1922 square kilometres, with much of the area remaining underexplored.

It hosts a series of high-grade iron oxide copper gold (IOCG) deposits, including Mount Hope, Nil Desperandum, and Lady Fanny, as well as exploration targets including Mohawk and San Quentin.

The project also has an existing in-situ resource of more than 300,000 tonnes of copper equivalent (CuEq), with a total of 21.8 million tonnes at 1.3% copper and 0.2 g/t gold.

MA Moelis says the Mohawk deposit is one of the most exciting recent discoveries at the Duchess, located approximately 1.5 km southeast of the established Mount Hope resource.

It was first identified through geophysical surveys (specifically a VTEM campaign), followed by initial surface sampling that returned some exceptional copper grades. Grab samples from Mohawk returned over 30% copper, which is highly significant for a copper exploration project.

This deposit remains open in all directions, with further drilling required to fully define the extent of the mineralisation at depth and along strike.

The initial mine plan suggests that open-pit operations will be used to extract the more shallow mineralisation, while deeper mineralisation will likely require long-hole open stoping for underground mining.

This phased approach allows for low capital expenditure and fast ramp-up to production, aided by the nearby Mt Isa processing infrastructure.

The scoping study indicates a potential nine-year operational life, with production expected to peak in 2029 at approximately 20,000 tonnes of copper annually.

With modest capital requirements of around $45 million, MA Moelis believes the project is positioned for rapid cash generation, with annual estimates of $45 million in free cash flow.

The copper market itself is poised for strong growth, driven by increasing demand for copper in electric vehicles, renewable energy, and energy storage, says MA Moelis.

However, supply is not keeping pace with demand, creating a supply deficit that projects like Carnaby’s can capitalise on.

FireFly’s Green Bay could boost stock price

Meanwhile, RBC Capital Markets has an outperform rating on FireFly Metals (ASX:FFM) with a price target of $1.55 per share, versus the current price of $1.20.

This rating is driven by Firefly’s Green Bay copper-gold project in Newfoundland, Canada.

Green Bay has already been partially permitted, but what makes this opportunity particularly interesting, according to RBC, is that Green Bay is a project with a rich history.

It’s not just an exploration play but an operation that has already seen substantial underground development, says RBC.

The project hosts 59 million tonnes of resources, and FireFly has said there’s potential to significantly increase this figure over the next few years, with some experts speculating that it could double as more exploration work is carried out.

RBC analysts believe the company could expand its resources and build a larger processing plant, moving beyond its initial 2 million tonnes per annum capacity. This would not only increase FireFly’s production potential, but also its overall profitability, says RBC.

At full production, Green Bay is estimated to generate between $130 million to $160 million in EBITDA annually, a very promising cash flow for a relatively small company.

The timeline to production is also more accelerated than many might think, says RBC.

While many mining projects can take years to get off the ground, FireFly is targeting first production by FY28. This puts it ahead of many other projects in terms of development, particularly as the global copper shortage continues to grow.

While there are still risks, such as the company needing to raise capital to fund its development, FireFly has a plan in place.

RBC estimates the company will need to spend $450 million over the next four years to advance the Green Bay project.

To fund this, FireFly will likely look at a combination of debt and equity, although there are options that could reduce the need for equity raises, such as selling down its Pickle Crow gold project or securing offtake agreements.

Over the next six to 12 months, there are several key events that could drive FireFly’s stock price higher, says RBC.

These include resource updates for both Green Bay and Pickle Crow, feasibility studies that will outline the economic potential of Green Bay, and potential offtake agreements.