Loyal Metals [ASX:LLM]

Metals & Mining

Undervalued Copper-Gold Opportunity Built on 122,000m of Historic Drilling

We initiate coverage on Loyal Metals (ASX: LLM) with a 12-month target price of A$0.736, representing 110% upside from the current share price of A$0.350. The Highway Reward Copper-Gold Projectis the primary value driver for Loyal Metals, supported by exceptional grades, proven past production, and recent exploration breakthroughs. This project forms the core of our near-term valuation. We see a strategic opportunity from the unmined resource potential in and around the existing mine, as well as the possibility of new discoveries at depth and across the broader Highway Reward property, which has been dormant for over 20 years. The system remains open along strike and at depth, indicating that large portions are yet to be fully explored. As drilling, resource definition, and technical milestones are delivered at Highway Reward, we expect potential for a meaningful re-rating. Additionally, Canadian Lithium Projects provide value optionality.

Drilling is the Primary Re-Rating Catalyst at Highway Reward

The central investment case for Loyal Metals is anchored in the Highway Reward Copper-Gold Project’s fundamental strengths: the deposit’s historically exceptional copper grade of 5.7%, its proven past production, and extensive historical drill coverage exceeding 122,000 metres, all fully verified and integrated into current exploration models. Recent positive drilling results, including a standout intercept of 132.5 metres of near-surface massive sulphides, highlight the significant unmined resource potential close to surface. Loyal Metals plans to leverage advanced drill targeting methodologies and deploy modern geophysical technologies to enhance its already substantial geological dataset, uncover new discoveries, and accelerate resource growth. A successful maiden JORC-compliant unmined resource definition, followed by ongoing resource expansion, would materially strengthen project economics, establish sector recognition, and drive valuation alignment with leading ASX copper-gold peers.

Commodity Price Upswing Reinforces Highway Reward Value Proposition

Copper and gold prices have increased dramatically since 1997, with copper up about 680% and gold over 1,250%, creating a robust tailwind that materially strengthens the Highway Reward Project’s economics and investment appeal. This long-term price uplift supports Loyal Metals' strategic positioning in the global resources market.

Valuation Range of A$0.631–A$0.842 per Share

Using a SOTP-based valuation methodology, we estimate LLM’s intrinsic value to be A$0.631 per share in a base case scenario and A$0.842 per share in a bull case. Our mid-point target price of A$0.736 highlights the significant upside potential, primarily driven by Highway Reward’s grade, resource scale, and historical dataset. Additionally, the Canadian Lithium Projects provide additional value option.

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Disclaimer: Directors of East Coast Research hold shares in Loyal Metals (ASX: LLM).