• Firefly Metals and Field Solutions both rated Speculative Buys by brokers
  • Firefly’s Canadian copper-gold mine is a catalyst for the stock
  • Telco stock Field Solutions price target downgraded due to cap raise


Firefly Metals’ share price could double

Broker Argonaut has rated Firefly Metals (ASX:FFM) a SPECULATIVE BUY, with a price target of $1.04 (versus current price of $0.55).

The $200m market capped Firefly owns the Green Bay Copper-Gold project in Newfoundland, Canada, which it acquired from administrators of Rambler Metals in August last year.

To secure the asset, FFM agreed to pay Rambler’s liquidators a total consideration of $65 million.

After acquiring the project, FFM said it will shift focus away from the Pickle Crow gold project to Green Bay, with major drilling programs already underway.

FFM says it aims to redevelop Green Bay as a significantly larger copper and gold producer than that run by Rambler Metals.

Green Bay includes the suspended Ming Mine, Little Deer Complex Resources, the 500ktpa Nugget Pond Plant and Goodyear’s Cover Port facility.

Existing infrastructure including underground development, processing, port, and camp is estimated to be worth in excess of $250m. The region is strongly geared towards the mining sector with several existing operations. Electricity is available at 7.4c/kwh.

The Ming Mine is developed to 950m below surface, and includes both decline and shaft access. Ming hosts volcanogenic massive sulphide (VMS) mineralisation, which occurs as ribbons of high-grade (~2.0-3.5% Cu) massive sulphide and lesser grade (~1.6% Cu) breccia stringer zones.

Ming Resources currently total 30.1Mt grading 1.85% Cu, 0.36g/t Au, 2.8g/t Ag. Additionally, the nearby Little Deer Complex hosts 9.1Mt of Resources grading 1.92% Cu, with minor gold and silver credits.

“Our redeveloped Ming operation includes improvement to underground access infrastructure and construction of a new 3Mtpa milling and flotation plant adjacent to the mining operation,” said the note out of Argonaut.

“Our diluted mining inventory grades 1.65% Cu, 0.35g/t Au and 2.50g/t Ag, consistent with the existing Resource base.

“Under our scenario, Ming would produce 46kt of copper, 23koz of gold and 144koz of silver per annum over a 14-year period at an AISC of US$1.77/lb Cu (net by-products). This outcome is strongly dependent on exploration success and Resource expansion.”

Argonaut believes that costs will benefit from existing infrastructure and hydro-electricity sourced grid power.

“We estimate US$300 million for capital costs including upgrade of underground access and build of a new process plant.

“Using a US$8,000/t copper price, our Green Bay model generates a Build Date NPV of $739m, equivalent to $2.05 per share of currently listed capital. We expect project funding would be provided by a mix of equity and debt.

“With Green Bay taking priority, we also suspect the Pickle Crow gold project could be sold off in the medium term,” noted Argonaut.

 Now read: This formidable team of Bellevue alumni has its sights set on the copper mid tier


Field Solutions’ price target downgraded, but could still triple

Meanwhile, Canaccord Genuity has also slapped a SPECULATIVE BUY rating on telco stock, Field Solutions (ASX:FSG), with a price target of $0.11 (versus the current share price of $0.036c).

Canaccord had originally set the target price at $0.19, but downgraded it to $0.11 after reducing its estimates on the company’s profits for FY24 and FY25.

The $28m market capped Field Solutions  builds and operates “true broadband network” – specifically for rural, regional and remote Australia.

In December last year, the company secured a $13m debt funding to complete its Regional Australia Network (RAN) buildout, which, when completed, will encompass a total of 127 new towers (21 completed) and 19 networks (three completed).

FSG said it anticipates the debt funding utilised for the network build to be repaid within 18 months.

“We note that ultimately, the current expansion of FSG’s RAN is expected to be funded by government grants awarded across 2021/22, and predominantly from the Regional Connectivity Program (RCP),” noted Canaccord.

As a result of this new funding and associated costs however, Canaccord has reduced its FY24 EBITDA estimate for FSG to $6.4m (from $8.7m), and FY25 EBITDA to $8m (from $10.8m).

And after incorporating new interest charges ($0.8m in FY24 and $1.6m in FY25), into its forecasts, Canaccord has also reduced its FY24 NPATA estimate for FSG to $1.1m (from $3.1m) and FY25 NPATA to $1.7m (from $5.1m).

“We note our FY24E forecasts remain unchanged for the Core ISP/MSP division to deliver EBITDA of $11.3m,” said Canaccord.

“On the back of revised forecasts, our sum-of-the-parts based target price and valuation is reduced to $0.11/share (from $0.19/share).

“However, while it’s a protracted process to access funding and build momentum in the current network expansion, that is now resolved and it’s now in FSG’s hands to execute, and on that basis we retain a Speculative Buy rating.”


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