Knockdown discovery valuations won't last

The owners of three of the best metal discoveries in recent times have been doing it hard on the market – along with the rest of the mining sector (reports Barry FitzGerald on MiningNews).

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The three - Chalice Mining, De Grey Mining, and Rumble Resources - were valued collectively at A$4.83 billion at their 52-week highs but are now back at $3.15 billion.

The $1.68 billion, or 35%, value crunch is despite the trio growing the scale of their discoveries, and making progress in advancing them towards production.

The market caps of all three remain at multiples of what they were before the discoveries were made.

But such is the malaise in equity and commodity markets, full recognition for the game-changing impact of the discoveries on the trio's market value has been put on hold.

That is just what the new project short major miners with investment timeframes spanning decades like to see.

It stands to reason that if the short-term focus of the equities market knocks off a collective 35% of value off the top three metal discoveries of recent times, the owners of the discoveries become more attractive prey for the mining majors.

Discoveries like Chalice's Julimar (PGE/nickel/copper), De Grey's Mallina (gold) and Rumble's Earaheedy (zinc/lead and possibly copper) don't often come along.

And given all three come with the scale and the Western Australian location that all of the growth hungry major miners want to have, the trio are effectively firming takeover targets as a result of their current knockdown valuations.

The best metal discoveries always end up in the hands of the major mining groups. It is just a matter of time.

That they are all much cheaper than they were has brought forward the likely timing of corporate action surrounding the trio.

Their challenge is to maintain an even pace towards first production, even if they suspect they will get knocked off at some point.

And that is pretty much what they have been doing.


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