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Maronan Metals ‘rising silver giant’: GBA Capital

Harry November 14, 2024

Maronan is worth 95 cents per share, according to a GBA Capital research report
The report expects feasibility studies in 2025/26 and production in 2030
The polymetallic package is expected to make the project economically viable

Special Report: GBA Capital sees Maronan Metals as Australia’s emerging silver giant, with a prominent mining analyst valuing the Queensland explorer at 95 cents per share.

This compares with 22c before the report was published and the potential 4x increase in silver and base metals is promising.

The company is developing its eponymous polymetallic Maronan silver-lead-copper-gold deposit near Cloncurry in Queensland.

The area is known for its rich mineral deposits and long mining history, including numerous tier 1 lead-zinc-silver operations such as Mount Isa, Century and Cannington, as well as copper-gold mines such as Ernest Henry and Eloise.

Maronan has 32.1 million tonnes at 6.1% lead and 107 g/t silver, 32.5 million tonnes at 0.84% copper and 0.61 g/t gold, and only 1 million tonnes at 1.24 g/t gold. It has 8 million tons of gold resources.

“Given the large-scale, rich silver grades of +100 g/t silver and the favorable location, Maronan is expected to deliver positive work in 2025/26, with an earlier date and reduction in initial capital expenditure in 2030 if the trucking option is adopted.” We are waiting for it to reach production. GBA analyst Trent Allen noted:

“It’s rare to see an exploration project and think ‘this looks like a mine’: Maronan was one of those positives.

“We are starting the research scope at a valuation of A$0.95/sh.”

2025/26 feasibility studies

Numerous gold and base metal mines operate successfully in the region, so Maronan has a clear and well-regulated permitting pathway to production.

And meanwhile Maronan Metals (ASX:MMA) While feasibility studies have not yet been published, they are ongoing and GBA’s financial model takes into account underground polymetallic production at an average rate of 13.5 Moz silver equivalent over +15 years.

This is about the same as 45,000 tpa of copper in dollar terms, or hypothetically 160,000 ozpa of gold.

“Based on industry research on similar projects, we estimate capex could be AU$350-450 million and site operating costs could be AU$100/t; easily milled silver-lead mineralization is an advantage,” says Allan.

It is worth noting that the Queensland Government, as part of its Critical Minerals Strategy, has invested $5 billion in the CopperString 2032 project, which will establish a high kV power connection between the North West Minerals State and the east coast grid in Townsville. can benefit from the project.

The province is also providing assistance to develop the critical minerals industry through the $170 million Critical Minerals and Battery Technology Fund, bearing in mind the recent change of government when David Crisafulli’s LNP unseated Steven Mile’s Labor Party.

MMA Map — Map of the Maronan project in Queensland. Image: MMA.

Polymetallic means flexible

GBA says Maronan is a polymetallic deposit, but the most influential commodity in terms of share price is silver.

Silver is approximately equal in value in terms of revenue during the first 5 years of production, but its price is much more variable.

With the understanding that the metal is critical for use as a conductor and in photovoltaics, prices have increased by nearly 60% in the last 12 months to around US$33 per ounce.

However, Allen says being able to produce both base and precious metals means the project can be economically resilient because a decline in one commodity can be partially offset by a rise in the other commodity, allowing them to make a profit over most economic cycles.

“We like this company because we see an opportunity for a relatively low-risk, large and economically compelling mining project in eastern Australia at Maronan,” Allan said.

“The company itself has been overlooked by investors, but the rising price of silver is changing that. “Depending on macroeconomic factors, MMA’s share price could approach our valuation over the next 12 months as the project progresses towards economic studies through resource improvements and a timeline for production.”

There is also an additional bonus of the explorer Red Metal (ASX:RDM) (which transferred the project to Maronan Metals in 2022) holds a 43.98% stake. RDM has a large rare earths project in QLD and could be expected to sell some of MMA over time to help fund this.

This article was developed in collaboration with Maronan Metals, a Stockhead advertiser at the time of publication.

This article does not constitute financial product recommendation. You should consider seeking independent advice before making any financial decisions.