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Aeon Metals fancied by Bell Potter with imminent news flow and prospect of production in 2020

While resource expansion would be a near-term catalyst, Bell Potter sees the prospect of copper-cobalt production as early as 2020.

Night photo of Mt Isa
Walford Creek Copper-Cobalt Project is near the Queensland mining centre of Mt Isa

Aeon Metals Ltd (ASX:AML) has caught the attention of Bell Potter with the broker maintaining its buy recommendation and upgrading its price target from 48 cents to 50 cents.

The company’s Walford Creek Copper-Cobalt Project near Mt Isa is at an advanced stage of exploration, having defined a resource of 15.7 million tonnes at 1.24% copper and 0.15% cobalt.

This equates to 194,000 tonnes of contained copper and 24,000 tonnes of contained cobalt.

The resource was updated in January, showing Walford Creek has one of the highest grade and largest tonnages of cobalt metal content among Australia's cobalt sulphide deposits.

Bell Potter analyst David Coates sees the potential for ‘very positive’ near-term news flow from Aeon through confirmation of material extensions to the current resource.

Potential resource extension

Coates points out that Aeon is about to start the single largest drilling campaign ever undertaken in North Queensland, and indeed, Walford Creek.

The 30,000-metre diamond core and reverse circulation drilling program will begin in coming weeks.

Coates believes copper-cobalt to be the best exposures to the electric vehicle and renewable energy theme, highlighting that Walford Creek is one of few such projects in Australia.

Even split between copper and cobalt

Crunching the numbers, Bell Potter estimates that at current prices the life of mine revenue split between copper and cobalt would be similar at about 45% each.

One of the interesting aspects about Aeon is that Bell Potter believes it could be in production as early as 2020, generating net profit of $14 million, equating to earnings per share of 3 cents.

In summing up the company Coates said: “AML has entered an exciting period of cost-effective discovery and growth, and there are strong expectations news flow from the upcoming drill program can deliver strong positive catalysts for the share price.”

The revised share price target implies upside of 85% to Monday’s closing price of 27 cents, implying a forward PE multiple of nine relative to Bell Potter’s 2020 forecasts.

Quick facts: Aeon Metals Ltd

Price: 0.115 AUD

Market: ASX
Market Cap: $77.92 m

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