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Blackstone Minerals could see several share price catalysts: Evolution Capital Advisors

Evolution says Blackstone has the opportunity to quickly close the valuation gap with some of its peers with an established treatment plant and the upcoming milestones.

Blackstone Minerals Ltd - Blackstone Minerals could see several share price catalysts: Evolution Capital Advisors
The company is aiming to deliver a maiden resource in the current quarter

Blackstone Minerals Ltd (ASX:BSX) recently extended the mineralisation at depth at the Ban Phuc DSS within the Ta Khoa Nickel-Copper-PGE Project in Vietnam with down-dip extension results of up to 47 metres at 1% nickel from 65 metres.

The company is aiming to deliver a maiden resource in the current quarter focused initially on the DSS at Ban Phuc and continues to investigate the potential to restart the existing Ban Phuc concentrator through focused exploration.

Evolution Capital Advisors has initiated coverage on Blackstone with a speculative buy recommendation and a price target of 67 cents (current price: 38 cents).

The following is an extract from Evolution’s research report:

Initiation of Coverage

Ta Khoa Ni-Cu-Co-PGE District: The geotectonic setting is strongly analogous to that displayed by some major Ni-Cu deposits such as Norilsk and Jinchuan. Both of these are located on major breaks between lithospheric plates, associated with deep, mantle-tapping structure allowing the ascent of mantle melts and formation of Ni-Cu-Co-PGE deposits.

Main Mineralisation Types:

  • The massive sulphide veins (MSV) occurs in the major shear controlled veins. At Ban Phuc, previous owners mined 975kt of highgrade ore at average grades of 2.4% Ni & 1.0% Cu from an average vein width of 1.3m, producing 20.7kt Ni, 10.1kt Cu and 0.67kt Co
  • The disseminated sulphides (DSS) are present within the Ban Phuc intrusive body with nickel grade typically ranging between 0.5% and 1.0% Ni.

Two-Fold Strategy: BSX is exploring / drilling for DSS to build tonnes and nickel units as well as for MSV to increase head grade.

Back of the Envelope Mining Inventory: Ban Phuc/ King Cobra Zone DSS = 40 Mt at 0.52% Ni; Ban Chang MSV (assumed similar to pre-production Ban Phuc MSV = 1.6 Mt at 2.2% Ni

Mining Scenarios: The DSS mineralisation is assumed to be mined by open pit with a strip ratio of 2.5:1 and the MSV mineralisation is assumed to be mined underground (capex US$12m).

Processing Scenarios: Throughput increased to 4Mtpa for US$100 million capex or early restart with existing capacity (capex US$18m).

Ta Khoa Valuation: We have run two development scenarios under various nickel price assumptions and set risk factors to 30% and 70% respectively.

The development scenarios do not include the downstream processing to produce nickel sulphate, which could bring further value.

News flow: We anticipate several share price catalysts including further results from the drilling programs at Ban Chang and Ban Phuc, maiden mineral resource and scoping study for the Ban Phuc/King Cobra disseminated mineralisation, some possible additional massive sulphide discoveries in the Ta Khoa district.

BSX Valuation: As the company continues to build a new mining inventory in the form of DSS and MSV, it opens numerous development options. Our speculative value currently stands at A$176 million or $0.67 per share. With an established treatment plant and the upcoming milestones, BSX has the opportunity to quickly close the valuation gap with some of its peers such as Mincor Resources Ltd (MCR.ASX) with a current enterprise value of A$230m.

Quick facts: Blackstone Minerals Ltd

Price: 0.42 AUD

ASX:BSX
Market: ASX
Market Cap: $130.43 m
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