MoneyTalks: Firefly Metals poised for share price growth amidst robust copper market, says broker

Argonaut slaps a Speculative Buy on Firefly Metals with a big price target
Copper market strength to propel Firefly’s position
We take a look at Firefly’s promising drilling results and future prospects

Who is Firefly?

Broker Argonaut has maintained its Speculative Buy recommendation on Firefly Metals (ASX:FFM), with a $1.45 per share Price Target (versus current price of $0.75).

Firefly is a $350m market-capped company focused on unlocking the potential of copper resources, operating primarily in the mining-friendly jurisdiction of Green Bay, Canada.

The company’s flagship is the Ming Mine project, which leverages advanced exploration techniques and a strategic approach to resource development.

In addition to Ming, Firefly is actively engaged in regional exploration activities within the broader Green Bay mineral package.

Strength of the copper market

Copper, often hailed as an industrial bellwether, continues to show strong market trends.

With global smelter production expected to surpass concentrate supply until 2027, the demand-supply imbalance sets a favourable stage for copper prices.

The temporary halt in operations at Cobre Panama has further heightened concerns about copper supply, emphasising the importance of reliable copper sources like Firefly Mining.

Despite recent price highs, copper is still trading below historical peaks when adjusted for inflation.

This indicates that there’s still room for growth, especially considering the ongoing global infrastructure projects and the increasing adoption of electric vehicles, which heavily rely on copper components.

In such a scenario, companies like FFM, with their focus on copper production, stand to benefit from the market dynamics, making them attractive investment options, said Argonaut.

Promising drilling results

One of the key drivers of Firefly Mining’s potential lies in its recent drilling results.

These results have not only confirmed the presence of economically viable mineralisation, but have also expanded the scope of exploration beyond the previously defined resource boundaries.

The most recently announced set of drilling results from Ming have confirmed potentially economic mineralisation down plunge from the current MRE (minerals resource estimate).

Highlights from this release include: 9.1m at 5.4% CuEq, 12m at 4.8% CuEq and 13m at 4.4% CuEq.

Historical hole R17-25B (102m at 1.7% Cu, 0.1g/t Au) extends known mineralisation at least ~350m down plunge from the termination of the existing MRE.

“We see no reason why the deposit would continue further than this hole,” said Argonaut.

“As it is progressed, FFM’s exploration drive will enable deeper potential extents of the deposit to be tested.”

What sets Firefly apart though, according to Argonaut, is its leverage of advanced geological modelling techniques like the 3D geological model.

This model serves as a dynamic tool for monitoring and modelling future drill results, allowing for informed decision-making.

“We have updated our Ming redevelopment forecast for 10% higher capital and slightly increased mining costs,” said Argonaut.

Down plunge drilling results

FFM has also reported new drilling results from beyond the bounds of the existing 30.2Mt at 2.1% for 634kt CuEq Ming Resource Estimate.

Drilling operations began from a newly constructed development drill drive, targeting areas below known resource boundaries.

In the upper sections of the mine, FFM encountered zones rich in copper and gold, showcasing notable grades of mineralisation.

Better results from the upper high-grade Massive Sulphide Upper Zones include:

9.1m at 5.4% CuEq (3.1% Cu & 2.4g/t Au)
13.0m at 4.4% CuEq (3.7% Cu & 0.8g/t Au)
11.0m at 4.4% CuEq (1.2% Cu & 3.8g/t Au)

Lower sections of the mine also displayed significant mineralisation, underscoring the substantial mineral potential.

Lower footwall results include:

12.0m at 4.8% CuEq within a broader zone of 37.4m @ 2.7% CuEq
4m at 4.05% CuEq within a broader zone of 23.2m @ 2.0% CuEq
13.8m at 2.3% CuEq and 12.0m @ 2.0% CuEq within 62.5m @ 1.3% CuEq

Argonaut’s recommendation

Following an equity raise in March, FFM is well funded to accelerate MRE expansion drilling, redevelopment studies and regional exploration.

Argonaut believes the company’s well-funded initiatives position it for potential share price catalysts in the short to medium term.

“Positive progression on any of these fronts could further buoy FFM’s share price performance,” said Argonaut.

“Improved strength in the copper price seems likely, adding further near-term upside.

“Crystallisation of additional funds through divestment of the Pickle Crow asset would also be well received.

“We assume a 24-month build period with construction starting in July 2026 at a total cost of US$330 million.

“Under our base case parameters, we estimate a Green Bay Build Date Post-Tax NPV of $872M ($1.83ps), and Present-Day Post-Tax NPV of $692M ($1.45ps),” said Argonaut.