What are MM’s thoughts on 29Metals (29M) & Mineral Resources (MIN)?
Hi James, Would appreciate your thoughts on 29 Metals (29M), has fallen 61% from it's April high also thoughts on Mineral Resources (MIN) please. Regards, Mick.
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Hi Mick,
29Metals Ltd (29M) $1.22 – This is a $590mn exploration and mining services business which has been smacked since April amplifying the falls across other copper & mining plays. Brokers have universally downgraded the stock recently and while I haven’t read these reports, I suspect it’s because these guys have negative free cash flow and carry debt at a time when commodity prices have fallen sharply. We prefer to stay in the big end of town in the current economic climate with OZ Minerals (OZL) or for a cheaper turnaround opportunity that has a few more complications but is priced for it, higher risk / higher potential reward, Sandfire Resources (SFR) would be the pick.
Minerals Resources (MIN) $43.80 – MIN suffered particularly badly on Friday after a sharp fall in iron prices while most lithium plays remain close to their 2022 lows i.e. no love from either of its revenue streams. The issue with MIN is that it’s a high cost Iron Ore producer at this stage so at around $100/tonne for Ore they are not making money on that part of the business. While the mining services / crushing division will be making $$, the strategy here is to syphon money from profitable areas into their Lithium developments. In short, this is a bull market stock, one I think that should be bought once it’s turned, not while it’s still on the skids – a dip under $40 would not surprise.
