Up 300% over a year, this minerals explorer still has further to go, one broker says

If you have an appetite for investing in minerals explorers that are in the development phase, according to the team at Bell Potter, it might be worth casting an eye over Sky Metals Ltd (ASX: SKY).

Earlier this week, the company reported, in its words, “exceptional high-grade tin and silver intercepts” in the first batch of new drill results from its Tallebung project in New South Wales.

These included intercepts of 3m at 604 grams per tonne of silver, 0.68% tin from a depth of 24m, 8m at 59.4 grams per tonne of silver, and 0.26% tin from a depth of 49m, among many more.

The company said the drilling “continues to demonstrate that the deposit remains open in all directions, with further assay results expected in the coming weeks”.

Lots of work underway

Sky Managing Director Oliver Davies said the results were encouraging.

With tin and silver prices reaching record highs, this is an outstanding time to be reporting such impressive early results from our ongoing multi‑rig drilling program at Tallebung. Tin has surged above US$53,000/t on the London Metals Exchange – more than four times the copper price – highlighting the exceptional value of high‑grade tin discoveries such as this. The high-grade intercepts from the southern and central parts of the deposit reinforce Tallebung’s status as a premier near‑term development opportunity, particularly against the backdrop of rising tin, silver and tungsten prices. We look forward to receiving further assay results in the coming weeks as drilling continues with multiple rigs, and to advancing the project rapidly toward potential tin‑silver‑tungsten production.

The company also said it expected to publish an updated mineral resources estimate in the first half of the year.

Analysts like what they see

Bell Potter said in its research note published this week that they also expected the company to publish a development study for the project, which would “provide a preliminary economic outlook for a potential low-cost, open pit mining operation that could generate three high-value products; tin concentrate, tungsten concentrate, and silver”.

The Bell Potter team added:

Tallebung is emerging as a strategic source of near-term tin, silver and tungsten supply in a stable jurisdiction. SKY is rapidly de-risking the project into development amidst a backdrop of rising tin, silver and tungsten prices. We expect news flow over the coming months to include drill results (ongoing); updated mineral resource estimate (current half); mine development study (current half); flowsheet optimisation (ongoing); and permitting activities (ongoing).

Bell Potter has upgraded its price target on the shares from 12 cents to 21 cents, with a speculative rating on the shares.

The Sky Metals share price was 15 cents on Wednesday morning, and is well above 12-month lows of 3.2 cents.

Sky Metals was valued at $127.8 million at the close of trade on Tuesday.

The post Up 300% over a year, this minerals explorer still has further to go, one broker says appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.