Disclosure: Denarius Metals Corp. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Price and Volume (1-year)
* Qualified Person: Dr. Stewart D. Redwood, PhD, FIMMM, QMR, FGS, Consulting Geologist to DMET
* Denarius Metals Corp. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in US$ unless otherwise specified.
Portfolio Summary
Portfolio of four polymetallic projects, with Zancudo in pre-production, and Aguablanca positioned for near-term production
Source: Company
Combined resources of 3.50 Moz AuEq or 2.33 Blbs CuEq across four projects
Zancudo Gold-Silver Project, Colombia (100% interest)
DMET has received final approval to build a 1,000 tpd processing plant, with concentrate production targeted for Q2-2026. The project commenced pre-production in Q2-2025. To date, DMET has shipped material containing 207 oz of gold, and 5 koz of silver.
Plant commissioning targeted for H1-2026
Project Location
The Zancudo district has produced 1.4-2.0 Moz AuEq
30 km southwest of Medellin
The project hosts a high-grade gold-silver-quartz vein system (3.5 km strike length x 0.4 km depth), and the historic Independencia gold mine
Excellent infrastructure, including underground mine access, connection to the national power grid, and water supply
Earlier this week, DMET completed an updated resource estimate.
Zancudo Resource Estimate
(QP: Scott E. Wilson, CPG, President of Resource Development Associates Inc.)
Source: Company
Resources increased 16% to 1.23 Moz AuEq
Indicated resources now account for 20% of the total (previously nil), implying we now have greater confidence in the resource estimate
Source: Company
Low initial CAPEX
10-year underground operations
Management intends to complete an updated PEA by year-end
AT-NPV5% of $206M, and a very high AT-IRR of 287%, using $1,800/oz Au (spot: $3,980/oz); For context, we view IRRs above 50% as highly attractive for mining projects
Given the recent resource update, and the significant rise in gold prices since the last PEA, we anticipate stronger project economics
Aguablanca Polymetallic Project (21% interest, operator), Spain
The Aguablanca project, which operated as an open-pit nickel-copper mine from 2005 to 2015, is planned to restart as an underground mine. It benefits from an existing 5,000 tpd processing plant, located 88 km from the company's Lomero project, with the capacity to process material from future Lomero operations.
Project Location
Source: Company
Recognized as a “Strategic project” by the European Commission
This project hosts the only known nickel-copper deposit in Spain
Fully permitted to re-start operations
The 2024 PFS assumed the project uses only 50% of the processing plant’s capacity, reserving the rest for Lomero to accelerate and reduce its production costs.
Located 88 km from DMET’s Lomero project
Aguablanca Polymetallic Project – Pre-Feasibility Study
With a well-maintained 5,000 tpd processing plant, the PFS estimated a low initial CAPEX of $6M
AT-NPV5% of $83M, and a very high AT-IRR of 213%, using $7.30/lb Ni (spot: $6.56/lb), and $3.50/lb Cu (spot: $4.98/lb Cu)
DMET has arranged an offtake agreement with Boliden AB (STO: BOL), a Swedish metals and mining company
2024 Resource Estimate (inclusive of reserves)
Underground resources total 110 Mlbs NiEq
2024 Reserve Estimate
(QP: Scott E. Wilson, CPG, President of Resource Development Associates Inc.)
Source: Company
This is a medium-tonnage deposit with a moderate grade of 0.93% (for reference, low grades are <0.3%, and high grades are 1.5%+)
Exploration Upside
Source: Company
We note that there is significant resource expansion potential as the deposit remains open along the north, main, and satellite orebodies
Upcoming Catalysts
Advancing all four projects simultaneously
Financials
At the end of June 2025, the company had $4M in cash, and $36M in debt
Source: FRC / Company
All options and warrants are out of the money
FRC Projections and Valuation
Source: FRC/S&P Capital IQ/Various
DMET is trading at C$47/oz (unchanged) vs the sector average of C$81/oz (previously C$62/oz
Our comparables valuation rose from C$1.06 to C$1.13/share, driven by higher sector valuations, partly offset by share dilution from equity financings
Our DCF (NAV) valuation fell from C$2.55/share to C$2.20/share, mainly due to share dilution, partly offset by higher metal price forecasts
These tables summarize our valuation on each project
Source: FRC
The average of our DCF and comparables valuations is C$1.66/share (previously C$1.81/share)
Our valuation remains highly sensitive to metal prices
We are reiterating our BUY rating, and adjusting our fair value estimate from C$1.81/share to C$1.66/share (the average of our DCF and comparables valuations). DMET is progressing high-potential projects, with Zancudo and Aguablanca targeting production in 2026. Trading below the sector average, the company offers diversified exposure to precious and base metals, with upcoming PEAs providing potential near-term catalysts for the share price.
Risks
We are maintaining our risk rating of 5 (Highly Speculative)
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