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.
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Price Performance (1-year)
*Subsequent to 2023, DMET has raised/secured $15M, and is currently pursuing a C$20M financing.
**See important disclosures at the bottom of this report rating and risk definitions. All figures in US$ unless otherwise specified.
Four polymetallic projects, including two near-term producers (Aguablanca and Zancudo)
Aguablanca Polymetallic Project (Spain) – 50% Interest
Located 88 km from DMET’s Lomero project
Excellent infrastructure, including access to an underground mine, and paved highways
As the project has a well-maintained 5,000 tpd processing plant, the PFS estimated a low initial CAPEX of $6.1M
The study returned an AT-NPV5% of $83M, and a very high AT-IRR of 213%, using $7.3/lb Ni, and $3.5/lb Cu, vs spot prices of US$8.6/lb Ni, and $4.6/lb Cu
Aguablanca Mine and Facilities
This project hosts the only known nickel-copper deposit in Spain
Lundin Mining (TSX: LUN) had operated the mine from 2007 to 2015, utilizing open-pit operations
An Environmental Impact Statement/EIS, and a mining license are in place
Awaiting a water use permit to begin dewatering the open-pit for underground access
The PFS was based on 89% of the project’s resources
A PEA on Lomero is expected in the coming weeks
Management is aiming to start commercial production by early 2025. The study was predicated on the project utilizing just 50% of the processing plant’s capacity. The remaining capacity is allocated for processing materials from Lomero, thereby expediting and reducing the cost of bringing Lomero into production.
Upcoming Catalysts
Subsequent to 2023, the company raised $5M through the above-mentioned NSR sale
DMET is currently finalizing a $10M financing facility with Trafigura, while pursuing a C$20M convertible debenture financing
DMET is trading at $25/oz (previously $20/oz) vs the sector average of $31/oz (previously $34/oz)
Our comparables valuation decreased from C$1.21 to C$0.86/share due to lower sector valuations
We are introducing our DCF/NAV valuation of C$2.43/share in this report, given the recently completed economic studies on Aguablanca and Zancudo.
We used a sum-of- parts valuation model; the tables presented here summarize our valuation on each project.
Our valuation is highly sensitive to metal prices
We are reiterating our BUY rating, and adjusting our fair value estimate from C$0.99/share to C$1.65/share (the average of our DCF and comparables valuations). Valuation increased as we introduced our DCF valuation models in this report. As the company is advancing multiple projects simultaneously, we believe the market has yet to fully comprehend the true intrinsic value of DMET. We anticipate a series of upcoming catalysts, including a PEA on Lomero, a resource update on Toral, and the commencement of production at Zancudo, and Aguablanca.
