MoneyTalks: Broker says NTU could double; Azure Minerals slapped with Speculative Buy and hefty price target

Argonaut says Northern Minerals could double
Canaccord slaps Speculative Buy on Azure Minerals

Northern Minerals ‘could double’ on rare earths demand

Broker Argonaut has initiated a coverage and put out a Speculative Buy recommendation on Northern Minerals (ASX:NTU), with a target price of 6.4c (vs current price of 3.4c).

NTU’s geographically remote Browns Range rare earth element (REE) project sits in northern Western Australia, near the Northern Territory border, with a total MRE reported as 10.8Mt grading 0.76% TREO.

The unusual xenotime mineralization hosted at Browns is enriched in high-value heavy rare earth elements (HREE) dysprosium (Dy), and terbium (Tb).

Both elements are considered critical for a wide range of advanced technology applications.

Dysprosium in particular is a scarce HREE used in the manufacture of REE magnets. According to Argounaut, the amount of Dy required for REE magnets is high compared to the supply available.

NTU previously built and operated a large-scale pilot plant operation for the production of a mixed rare earth carbonate, with ore sourced from the Wolverine and Gambit West deposits.

“A revised DFS is currently assessing the viability of a ~910ktpa mining operation for the production of a xenotime mineral concentrate for sale to corporate partner Iluka Resources (ASX:ILU),” noted Argonaut.

In October 2022, NTU and Iluka announced a strategic partnership.

The agreement was framed around the supply of xenotime concentrate by NTU to Iluka’s Eneabba REE refinery, and as part of the deal, the two parties agreed to a conditional funding package of $73 million.

“This change in strategy reduces financial and technical risk for NTU by eliminating the need to construct and operate a dedicated hydrometallurgical refinery.

“Instead, NTU will restrict its activities to mining, ore sorting, and flotation beneficiation,” said Argonaut.

The broker also said NTU could provide Western countries with a diversification away from China.

“If Western economies wish to develop REE magnetic supply chains external to China, new sources of metals must be incentivised by robust market pricing.”

Canaccord slaps Speculative Buy on Azure

Canaccord Genuity has also slapped a Speculative Buy on Azure Minerals (ASX:AZS), with a target price of $3.20 (vs current price of $2.50 at the time of writing).

Azure, which has recently received expressions of interest from Sociedad Química y Minera de Chile regarding a potential takeover, has published an Exploration Target of 100-240Mt grading 1.0-1.5% Li2O for the 60%-owned Andover Lithium Project located in the Pilbara region.

For context, after applying AZS’ 60% ownership, the 150Mt upper end of the Exploration Target (240Mt for 100% of the project) approaches the 156Mt resource defined by Liontown Resources (ASX:LTR). at its Kathleen Valley

“This is arguably located in a far more strategic location in our view, just 50km for a deep-water port, versus 680km for LTR’s Kathleen Valley,” Canaccord added.

“While the $6bn LTR is on the cusp of production, we see strong similarities with AZS in terms of project scale and quality of asset.”

Extensive rock chip sampling has confirmed surface mineralisation at Andover, but Canaccord cautions around the extrapolation of surface mapping to assume depth extent and geometry, and see both upside and downside risk to this.

“Noting that the AP0011 mineralisation blows out at depth, the surface expression of subsequent pegmatites could follow suit; it could also go the other way,” the broker said.

AZS now has heritage approval to drill all locations with the Exploration Target area, and is therefore unencumbered with respect to access on the ground.

Assays are pending for a number of diamond and reverse circulation holes, with results expected to continue to flow.

“With the current growth rate of this emerging deposit, we’d expect AZS to publish a maiden JORC resource early in CY24,” said Canaccord.

In a recent note, Cannaccord upgraded AZS’s price target with its valuation centring on AZS defining 120Mt of resources over time.

“Fortuitously, our 120Mt fits neatly into the Exploration Target, and is half of the 240Mt upper range. We reiterate our Speculative Buy recommendation and $3.20 price target,” said the note from Canaccord.

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