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Mining
Want to know how March quarter reporting season could unfold BEFORE the reports come out? Look no further.
Yesterday we gave you a look at what the analysts said ahead of the reporting season as the big dogs of the ASX load up their calculators and get ready to print some numbers.
After giving you a taste of some of the big gold and bulk miners, we’ve unearthed a few more stocks to watch this March quarter results run.
Once again, we’ve consulted notes from Goldman Sachs, Canaccord Genuity and RBC Capital Markets to see how some of Australia’s top analysts see quarterly season shaking out.
Reporting Date: Tuesday, April 30
Market Cap: $5.5b
What the experts say
Lithium prices have been on the up over the past month, but IGO has been sold off, not the least because of a loaded gun of a note dropped by Tim Hoff at Canaccord Genuity, who put a sell label and $5.50 price target on the stock.
IGO hasn’t been quite the same since its $1.3b acquisition of nickel rival Western Areas went south, eventually placing its Cosmos development on care and maintenance as prices cratered.
While its non-controlling 24.99% stake in the world class Greenbushes lithium mine is a cash cow, its Kwinana lithium hydroxide JV and nickel business are a millstone right now. Soft production from Greenbushes could also be on the cards, Hoff said, with its JV partners electing to stockpile material due to weak chemical prices in China.
RBC, on the other hand, has an $8.25 PT on IGO, down from $8.50 after lowering its lithium price deck.
Analysts’ March Quarter Forecasts
Production and sales — Spodumene: 295,000t (production) and 236,000t (sales) (CG), 300,000t (produced and sold) (RBC), 282,000t (consensus), Nova Nickel: 5300t (RBC), 5400t (CG), 5500t (cons) Forrestania Nickel: 1890t (RBC), 1800t (CG), 1790t (cons).
Pricing — Spodumene: US$926/t (CG).
Operating cost — Spodumene: $450/t (RBC), $405/t (cons), Nova Nickel: US:4.11/lb (RBC), US$4.10/lb (CG), US$4.07/lb (cons), Forrestania Nickel: US$10.99/lb (RBC), US$12.25/lb (CG), US$10.84/lb (cons).
Reporting Date: Tuesday, April 23
Market Cap: $325 million
What the experts say
What a rollercoaster it’s been for 29Metals, which had to shut its Capricorn copper mine in Queensland because of massive rainfall events for the second time in a year in March. It may have been mothballs anyway with 29M yet to update the market on the tailings expansion which needed to be approved by the end of this month.
The Golden Grove copper, zinc, gold and silver mine in WA is now its only operating asset, but flying copper prices have brought investors pouring back into the downtrodden stock.
RBC has a 50c price target on 29M and is sector perform rated, but says tailings approvals at Golden Grove and Capricorn could result in a rerate. Canaccord has an identical price target and hold rating on 29M, having upped its target from 41c in line with a broader rerate of its copper coverage.
Canaccord says it is watching for higher zinc sales and production from Golden Grove as the Xantho Extended orebody ramps up, but the company’s cash burn and free cash flow is being closely monitored by both CG and RBC after the Capricorn debacle.
Analysts’ March Quarter Forecasts
Production and sales — Copper: 6800t (CG), 7420t (RBC), 7800t (cons), Zinc: 19,500t (CG), 14,300t (RBC), 14,800t (cons).
Pricing: US$823/t or US$950/t SC6Eq (CG), US$872/t SC6Eq (RBC), US$965/t SC6Eq (consensus).
Operating cost: US$1.01/lb (Golden Grove) and US$4.40/lb (Capricorn) (CG), A$4.71/lb (C1 Golden Grove) and A$7.97/lb (C1 Capricorn) (RBC).
Reporting Date: Friday, April 19
Market Cap: $6.5b
What the experts say
Whitehaven’s quarterly tomorrow will be more about the outlook with BHP’s Daunia and Blackwater mines in its portfolio than the summary of the March quarter at its New South Wales thermal coal mines.
Expect some form of update also on the process to trade a 20% stake in the Blackwater met coal mine, likely to bring a Japanese or Indian offtake partner in as a minority strategic partner.
Goldman is neutral rated on Whitehaven with a $5.80 price target. The company has been hovering above the $7 mark since the US$4.1b Daunia and Blackwater deal was announced in October last year, though GS does not have the met coal mines in its base case. The acquisitions will mean 70% of the company’s revenue going forward will come from selling steelmaking coal.
Analysts’ March Quarter Forecasts
Production and sales — Coal: 3.5Mt (GS), 3.6Mt (cons).
Pricing: N/A
Operating cost: N/A
Reporting Date: Wednesday, April 24
Market Cap: $3.4b
What the experts say
The high grade iron ore miner, dual listed in Canada, has a couple strings to its bow.
Having acquired the Bloom Lake Complex in a well-timed move during the iron ore bust, Champion has leveraged its high grades and premiums to fund a doubling of capacity to over 15Mtpa.
Goldman Sachs analysts, who have a buy rating on the miner, think it could eventually push beyond 20Mtpa, with plans also afoot to produce a super high grade 69% Fe-plus product for direct reduced iron plants that could garner ultra-premium prices.
Analysts’ March Quarter Forecasts
Production — Iron ore: 3.2Mt (GS), 3.5Mt (cons).
Pricing: C$118/t (GS), C$154/t (cons).
Operating cost: C$81/t (GS), C$72/t (cons).
Reporting Date: Wednesday, April 24
Market Cap: $6b
What the experts say
Lynas had a big performance yesterday, rising nearly 6% after it emerged Gina Rinehart had built a substantial stake in the rare earths producer.
But analysts will no doubt focus on the progress of its Kalgoorlie cracking and leaching plant, which has come in well past time and over budget. Commentary about the rare earths market, which has been smashed by rising Chinese quotas in the past two years despite rising demand from end users, will also be observed closely.
Goldman Sachs, which has a buy rating and $7.50 price target on Lynas, says it sees upside to recent spot prices of US$48/kg for NdPr, expecting them to average US$55/kg in 2024 based on the bank’s supply-demand models. It thinks Lynas will hit a target of doubling NdPr output to 12,000tpa by 2026, and is bullish on rare earths generally with a long term price forecast of US$83/kg.
Analysts’ March Quarter Forecasts
Production and sales — NdPr: 1400t (GS), 1500t (cons), TREO: 3500t (GS), 3800t (cons).
Pricing: $39/kg (GS), $38/kg (cons).
Operating cost: $31/kg (GS), $41/kg (cons).
Reporting Date: TBC
Market Cap: $1.5b
What the experts say
Metals Acquisition is one of the newest mid-tier miners on the ASX, having transformed from blank cheque business to mine owner with the acquisition of Glencore’s CSA mine in Cobar last year.
After a $325m IPO to dual-list on the ASX alongside its Nasdaq listing, MAC has become one of a handful of billion dollar plus copper producers on the local bourse, alongside Sandfire Resources and TSX-listed Capstone Copper.
Canaccord Genuity is one of the few prominent brokers covering the stock after running its IPO raising. Analysts there have lifted their price target from $23 to $25 on the back of strong copper prices and a higher multiple on copper production. But electrical issues may have resulted in 500t of lost production in the March quarter, they noted.
Analysts’ March Quarter Forecasts
Production and sales — Copper: 9200t (CG)
Pricing: N/A
Operating cost: US$2.30/lb (C1) (CG)
Reporting Date: TBC
Market Cap: $2b
What the experts say
Coronado is dual-listed in the US, where it runs the Buchanan mine, where geotechnical issues have hampered production in recent time. The performance there will be a big focus for analysts, who will also be looking to tease out the impacts of wet weather on its Curragh mine in Queensland.
Goldman Sachs is positive on price realisations, expecting them to lift from 60% to 75% between the December and March quarters.
Analysts’ March Quarter Forecasts
Production and sales — Coal: 3.9Mt (GS), 4Mt (cons).
Pricing: US$230/t (GS), US$187/t (cons).
Operating cost: N/A
We’ll round off our pre-quarterly coverage with a handful of smaller names to watch tomorrow.
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