Western Metallica Resources Corp. (TSX-V:WMS) is seen delivering impressive returns to shareholders amid a resurgence in interest in copper, say analysts at Hallgarten + Company who have initiated coverage on the Peru-focused explorer.
The analysts awarded the stock a 12-month price target of $0.13, representing an upside of about 270% from Western Metallica’s share price at the time of writing.
They awarded the company a ‘Long’ rating, which suggests capital appreciation to their target price in the next 12 months.
The analysts highlighted the company’s pivot to a copper focus with its past-producing assets in Peru as copper is “finally breaking free.”
“Copper is again surging in price and investor interest, where each of the up-moves seem to reset the trading range higher even if it does not push on to new repeated highs,” the analysts wrote.
“We are relatively bullish on the copper price outlook for the end of 2024, despite the last two years having been relatively disappointing for bulls of the red metal.”
Western Metallica in August 2023 acquired mineral claims, rights and interests in two copper-molybdenum porphyry prospective projects in Peru: Caña Brava and the past-producing Turmalina Mine.
Both projects are located on the Upper Cretaceous and Miocene (northern Peru-Ecuador) copper-molybdenum porphyry belt and are near the coast with good accessibility supporting future project scalability.
The prospectivity of these projects is further reinforced by their location in the vicinity of major players like Rio Tinto, First Quantum and Hudbay Minerals, the analysts believe.
“In a market denuded of copper explorers and developers, by years of inaction and investor disinterest, those companies positioned in the space with past-producing assets (with historical resources) are few and far between. Western Metallica is one of these,” the analysts wrote.
“Moving the focus to past-producing copper in mining-amenable jurisdictions is a smart move at this juncture.”
The company also has assets in Spain in the Navelgas Gold Belt, except for the past-producing Nueva Celti base metals project which is located in Andalucia, a resurging mining district in Southern Spain.
The analysts noted that Andalucia and Peru are both “positive” jurisdictions, but noted challenges in Northern Spain, where gold developers have faced local opposition.
“We can only presume that the ridiculously low market cap [of Western Metallica] is due to some investors still fixating on gold in Northern Spain, which is now in the ejector seat. This is past history,” they wrote.
“To some extent though the company has not up-played the past-producing copper assets it has now corralled, waiting for advancement of its exploration efforts on Nueva Celti and Turmalina before trumpeting their attractions.”