Stifel GMP analysts have initiated coverage of Talon Metals with a “Buy” rating and C$0.90 price target, calling the company’s Tamarack nickel project in Minnesota “one of the most strategic projects for the US to secure a domestic nickel supply,” in a note to clients.
The firm pointed to the Defense Production Act, which US president Joe Biden invoked earlier this month to accelerate domestic production of five key energy technologies, one of which is electrolyzers, fuel cells and platinum group metals.
That decision, plus rapid demand growth for electric vehicle (EV) batteries and Talon’s supply agreement with Tesla Inc (NASDAQ:TSLA), put the company in an attractive position, Stifel said. Additionally, the firm noted Tamarack's higher grade, which provides greater resilience to inflationary pressures, adding that its resource base hosts substantial upside.
Shares of Talon Metals climbed 2.5% Wednesday morning to C$0.41.
Stifel offered context about the value of nickel and its uses.
“Although the majority of nickel's first use (72%) is in the production of stainless steel, class 1 nickel, the high purity product of the Tamarack project and the raw material for EV batteries, which currently accounts for 7% of first use, is poised to continue rapid demand growth (31% by 2030),” the firm said.
It continued, “Tamarack’s unique characteristics, in our view, could result in an easier permitting scenario than other base metals projects in Minnesota, which have historically faced permitting challenges owing to complexities arising from social and environmental groups.”
In fact, Stifel argued that a 2021 preliminary economic assessment underestimated the project’s mine life at nine years, whereas the firm estimates a life of 17 years with nickel equivalent production of 22 kilotonnes per year.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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